Bankruptcy is a safety rope that can save many people from crippling financial debts. There are multiple forms of bankruptcy, and each of them offers different benefits and drawbacks. If you are considering bankruptcy, how can you be sure which option is right for you?
Despite how difficult it may seem to decide between bankruptcy options, hundreds of thousands of Americans decide every year. To help you decide, here is a summary of Chapter 7 and Chapter 13 bankruptcy:
The goal of bankruptcy is to help an applicant take back control over their finances. Chapter 7 bankruptcy offers this control by discharging most of your debt. To receive a discharge of debt, a Chapter 7 applicant will need to sell any non-exempt assets. Once the applicant has sold their non-primary homes, heirlooms, and collectibles and applied those funds to their debt, the government will discharge the remaining debt.
This option of bankruptcy does not require the debtor to sell their possessions. Instead, Chapter 13 bankruptcy restructures the monthly payments an applicant has into a single monthly payment into a new payment plan. This payment plan lasts between three and five years. Once the payment plan is done, the remaining debt is then discharged.
Which should you pick?
It may still be challenging to choose which bankruptcy option you want to pursue. Speak with a bankruptcy attorney to gain a better understanding of how each option can impact you. Do not be afraid to seek bankruptcy, as it may help you escape financial hardship.