Millions of people are in debt. You may be in debt because of credit card purchases, medical bills, student loans, high interest rates or late payments. These debts can be stressful and greatly impact your living. If you can not make these payments on your own, you can consider filing for bankruptcy.
Bankruptcy is a process that allows you to relieve large amounts of debt, typically, at the cost of your credit score. Once you successfully file for bankruptcy, your debt can be discharged after a few months. How long it takes for you to be debt-free depends on the kind of bankruptcy you file for.
You have the option of filing for Chapter 7 or Chapter 13 bankruptcy. Both options can help you resolve your debt obligations. However, they are not the same. You can read the following to learn which form of bankruptcy works best for you:
Why you should file for Chapter 7 bankruptcy
Chapter 7 bankruptcy allows you to discharge your debts after 4 to 6 months. This form of bankruptcy is often for people who have no other means of paying off their debt because they have a low income.
Chapter 7 bankruptcy is commonly known as liquidation bankruptcy. This is because very few people are required to liquidate non exempt assets to resolve debts. However, the majority of files do not own non exempt assets and are often safe from the liquidation process.
Why you should file for Chapter 13 bankruptcy
Alternatively, Chapter 13 bankruptcy is available to people who can afford some of their debts. Chapter 13 bankruptcy reorganizes debts. Once the filer’s debts are reorganized, they are obligated to pay some of their debts for a few years. Once enough payments are made, the remaining debts are resolved.
Filers can reach out for legal guidance as they begin their bankruptcy journey.
