Debt can quickly become overwhelming. You could spend a large part of your income each month on debts, which could cause you to struggle to afford your basic needs. As a result, you may be looking for debt relief solutions.
Bankruptcy is a process that allows people to settle their debt obligations. Filers can relieve medical debts, late fees, tax debts, student loan debts, credit card debts and utility bills when they file for bankruptcy. There are two common kinds of bankruptcy: Chapter 7 and Chapter 13 bankruptcy. Which one you may want to file for will likely depend on your unique financial situation. Here is what you should know about each:
Chapter 7 bankruptcy
One of the most commonly filed forms of bankruptcy is Chapter 7. Chapter 7 bankruptcy can discharge debts within a few months of filing. There is no repayment plan for the filer. Many people refer to Chapter 7 bankruptcy as liquidation bankruptcy. This is because some people may need to liquidate nonexempt assets, such as sports cards, fine art or summer homes to satisfy creditors. However, liquidation is a rare part of the Chapter 7 bankruptcy process.
After a successful Chapter 7 bankruptcy, you will have to wait to file for bankruptcy again, should the need arise. After filing a Chapter 7 bankruptcy, it can take eight years to file for Chapter 7 bankruptcy and four years to file for Chapter 13 bankruptcy.
Chapter 13 bankruptcy
Chapter 13 bankruptcy is the alternative that is chosen by people who have some disposable income that can go toward their debts. With Chapter 13, an individual’s debts are restructured so they can make affordable payments. Debts are paid off over several years and remaining debts are usually discharged.
A successful Chapter 13 bankruptcy will mean that you will need to wait 6 years to file for Chapter 7 bankruptcy and two years to file again for Chapter 13 bankruptcy. To learn more about your bankruptcy options, it can help to reach out for legal guidance.
