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- Which chapter will be best fit for your situation?
- What debt will be discharged if you file a bankruptcy?
- What are your alternatives to bankruptcy?
There are two common bankruptcy types: Chapter 7 and Chapter 13. The most popular is Chapter 7. In Chapter 7, your property will be sold to pay off your debt, but it may leave you with some property to make a fresh start. On the other hands, you get to keep all of your property. The catch is you have to make monthly payments over 3-5 years to repay your debt.
Both types of bankruptcy have a lot of rules and exceptions to those rules. Which chapter is best for your situation will depend on your current income, nature of debt, and the value of your assets.
Alternatives To Bankruptcy:
Filing bankruptcy is one of methods for handling debt, but it is NOT the only solution. There are other alternatives and different strategies. For starters, try to talk to your creditors. Let them know about your financial situation. If your monthly payment is too much for you now, ask for minimum monthly payments.
Consider help from Consumer Credit Counseling Service. It is a nationwide nonprofit organization that offers free credit counseling. Finally, you can also consolidate your debts into a single loan.
When Can You File Bankruptcy ?:
Unfortunately, there is no magic formula to tell you. But in general, if the following apply to you, filing bankruptcy may be appropriate.
- You have a large number of dependents.
- Your debt is very large.
- You don’t have little or no cash reserves and retirement saving.
- The older you are.
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