What You Need to Know When Filing for Bankruptcy
When financial hits such as overwhelming debt or loss of income happen, people sometimes have no other option than to file for bankruptcy. There are several legal nuances and long-term ramifications that individuals considering this path should be aware of.
Being buried in debt puts an individual or family at risk of losing their home to foreclosure, getting their vehicle(s) repossessed, and ruining their credit rating. For business owners, unmanageable debt can lead to the company closing its doors, restructuring or being purchased by another company. There are no cookie-cutter or easy decisions when it comes to bankruptcy.
Generally, bankruptcy is divided into two types – Chapter 7 and Chapter 13. Your bankruptcy options may include:
- In a Chapter 7 (liquidation) bankruptcy, unsecured debts are fully discharged, leaving you with no further obligations to make payments on unsecured debts like credit cards, medical bills, signature loans, etc.
- In a Chapter 13 (reorganization) bankruptcy, you may be able to keep all of your property, but must make monthly payments over a three to five year period to repay all or some of your debt.
An experienced bankruptcy attorney can examine your financial situation and advise you on the best way to proceed. Successful navigation of the bankruptcy process can get your debts under control and give you a fresh start.