Choosing to File for Personal Bankruptcy

josephperkins
November 5, 2012

(US bankruptcy law) If you are tired of the stress that comes along with being nose-deep in debt, then you may very well be considering the option of filing for personal bankruptcy. Of course, this option is not right for everybody who is experiencing financial problems, but it is a viable solution for many who are so far in debt that they have little to no chance of escaping any time in the near future. When it comes to filing for personal bankruptcy, this can be a great way of relieving debt, striking agreements with creditors that you owe money to, and finally being able to breathe again. Of course, before filing for bankruptcy, you will have to make an important decision by deciding which type is best for you: chapter 7 or chapter 13.

There are significant differences between chapter 7 and chapter 13 bankruptcy, and your specific situation should help you to decide which option is best. For starters, it is a good thing to realize that student loan debt and some other types of debt cannot be forgiven under either type of bankruptcy, so if you are planning on filing for these reasons, you may want to reconsider.

One difference between chapter 7 and chapter 13 bankruptcy is the length of time that each stays on your credit report. Chapter 7 will be on your report for ten years, while chapter 13 stays on for a bit less time of seven years. Keep in mind that, with a bankruptcy on your record, it may be more difficult for you to get approved for loans, lease an apartment, or get approved for anything else that requires a credit score.

Another major distinction between chapter 7 and chapter 13 personal bankruptcy is that chapter 7 involves the liquidation of assets in order to pay off debts. In this sense, any assets that you own outright, such as property, can be taken from you and used to pay off debts. In chapter 13 bankruptcy, on the other hand, this is not the case. Instead, you get to keep your property but essentially work out a reasonable payment plan with your creditors to pay off your debts over a longer period of time.

If you are having trouble when it comes to deciding which type of bankruptcy option is right for you, then you may want to speak with a financial advisor or a personal Mequon bankruptcy lawyer as a way of getting assistance in figuring this out. From there, you can use your bankruptcy lawyer to help you through the rest of the process, which can be quite painstaking and time consuming otherwise. Good luck!