While filing for bankruptcy might sound like a frightening thing to do, more than 1.2 million people in Pennsylvania and across the nation have sought federal protections, according to a recent report. Whenever people declare bankruptcy, they are usually trying to find a way out of uncontrollable or unmanageable debt.
Chapter 13 and Chapter 7 are the usual types of bankruptcy filings for consumers. Chapter 13 bankruptcy applies to those who wish to pay back obligations on particular non-exempt property, or assets that creditors can claim such as cash, valuables, a home or a second vehicle. Chapter 7 bankruptcy filers forfeit all their non-exempt assets in order to satisfy their debtors. This option is particularly helpful for those with large credit card debts or other unsecured debts. Both filings will bar creditors from attempting to foreclose a person's home.
While bankruptcy is a serious decision that may affect the filer for years, there are certain times in which filing for bankruptcy is a wise decision. Becoming a senior can be reason for filing for bankruptcy because inflation, decreasing pension payments and the inability to work might affect a person's ability to pay back debts. Because their Social Security benefits, Roth IRAs, regular IRAs and many tax-exempt accounts do not count as income, seniors are increasingly becoming more eligible to declare bankruptcy.
Extended unemployment, an overwhelming amount of debts and medical bills, and debts following a divorce are also other reasons to file for bankruptcy. Sometimes, declaring bankruptcy may be the only way individuals can straighten out their financial situation so that they can regain economic stability.
People whose payments on debts may be greater than their assets might consider contacting an attorney who is knowledgeable in bankruptcy laws. With legal guidance, a person might understand which filing would be beneficial for their circumstances.