Filing for bankruptcy is a major decision, one that may seem complicated when you’re loaded down with debt. Many people know that bankruptcy is an option when they are unable to pay their bills, but they don’t know what they should do. There is a way to get your life and finances back on track.

 

One of the first things you should know is that every year over one million Americans choose the path of bankruptcy to help them get out of a difficult financial situation. They can prevent their homes from being foreclosed and stop the calls by debt collection agencies.

 

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Different Types of Bankruptcy

Bankruptcy is not a single process. There are different types of bankruptcy, and you may qualify for more than one. You must decide which one will best help you meet your goals.

 

Chapter 7 Bankruptcy

Chapter 7 is the choice for many because it is completed faster – often within 180 days. It is also ideal for people who have limited income or no income and very few assets. The person will go to court to request that all unsecured debts be discharged. To qualify for this type of bankruptcy, the person must be under the median income for the state where they live. They must not be able to pay back the debt with their income.

 

Chapter 13 Bankruptcy

This type of bankruptcy is different from what you might expect. It is commonly thought that bankruptcy means you don’t have to pay your bills. However, with Chapter 13 bankruptcy, you do pay back what you owe. The difference is it is paid in manageable terms.

 

In this situation, all of your debts are included in a repayment plan that you propose. The court must accept your plan for it to be discharged. You generally have up to five years to repay as much of the debt as you can before it is discharged. With this plan, you can include your car loan, student loans and mortgage payments as well as unsecured debt. One of the main differences between this and Chapter 7 is that certain debts such as student loans and tax bills cannot be included in Chapter 7.

 

Do You Need a Bankruptcy Attorney?

It may be in your best interest to hire someone. They can advise you on your options and explain each type of bankruptcy to you. The attorney will be able to provide information about the process and unfamiliar terms to ensure you don’t make the wrong decisions.

 

Your attorney will deal with creditors, allowing you to breathe easier. After you have filed bankruptcy, the creditors will stop contacting you completely. 

 

The first step can seem like a big deal, but all you have to do is fill out a form and request contact from a qualified bankruptcy attorney. They can answer your questions to help you decide if you want to move forward with the bankruptcy process.

 

Bankruptcy is just like any other information on your credit history. As it ages, it will have less of an impact. It also allows you to have a fresh start with your bills so that you can move forward with your life. Just make sure you talk to someone who knows the ins and outs of bankruptcy so that you can make the right decision about what is best for you.

 

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