There are many people who use bankruptcy as a solution to their overwhelming debt. However, filing for bankruptcy should be the last thing you think of when you are trying to find a solution to your financial problems.
Generally speaking, you should not consider filing for bankruptcy until all of your other options have been exhausted. It is not a way to get out of debt and fix your financial worries. It should be your last resort and you should file for it only when there is no other solution to your problem.
When you find that you are in a financial situation that has gotten completely out of control and you are unable to pay for rent and you no longer have any credit available to you, filing for a chapter seven or thirteen bankruptcy might be the way that you can improve your situation.
Chapter seven and thirteen are two forms of bankruptcy that you can file. These can help you control your debt and begin to get back on your feet when you are in a desperate financial situation. A chapter seven bankruptcy is often filed if you need to get rid of your debt. On the other hand, chapter thirteen is filed when you still have regular income and want to work out a payment arrangement for paying off your debt.
When you file for bankruptcy, the court will keep your creditors from taking any future action against you for the debt that you owe them. Your creditors will be prohibited from taking any action against you when you are in the midst of a bankruptcy. You will not have to worry about having your wages taken or any of the other things your creditors can do to you in order to collect your debt to them. You will also avoid a foreclosure unless the bank gets a court order.
Chapter seven bankruptcy is primarily for people who have unsecured debt. This often involves an excessive amount of credit card debt. When chapter seven bankruptcy is approved, all of the person’s credit card debt is cleared and the person is no longer under any obligation to pay it off. It is also possible to sign an agreement that will allow you to pay off only some of the debt.
For those who have a great amount of secured debt, chapter thirteen bankruptcy is the option. Usually, the amount of debt is wrapped up in a home mortgage. This will help the person keep his home and work out an arrangement to pay off the debt over a longer period of time. The person who files this type of bankruptcy will get an additional three to five years to pay off what is owed.
It does not matter what kind of bankruptcy you file. With both types, there will still be things you will have to pay. Among the financial obligations that will not be removed are student loans, taxes, and child support.
The one thing you should keep in mind is that filing for bankruptcy is for people who have no other option. This will be on your credit history for at least ten years so you should be sure that it is the best choice for your situation before going through with it. You should not go into this without understanding all of the ramifications and exploring all of your other options.