The thought of filing for bankruptcy is enough to scare many people. While this isn't something you want to do, it's good to know that the process can help you improve your financial situation.
There are many types of bankruptcy, with Chapter 7 and Chapter 13 among the most common for individuals.
Generally speaking, when given the choice, most people prefer Chapter 7 if they qualify. The reason for this is simple: It allows them to discharge all or most of their debt, without the requirement to repay creditors through a repayment plan.
1. A clean slate
With the help of Chapter 7, you will receive a fresh start with regard to your finances. It may not eliminate all your debt, but it will definitely put you in a position to start fresh so you can make better decisions in the future.
2. No limit on the amount of debt
With Chapter 13 bankruptcy, there is a limit with respect to the amount of debt you can have. This is not the case with Chapter 7, which goes a long way in making more people eligible.
3. No repayment plan
Although there are benefits associated with Chapter 13, one of the primary downfalls is the repayment plan. Chapter 7 doesn't require this. Instead, once your debt is discharged, you are no longer responsible for it. You don't have to repay creditors over a period of three to five years.
4. A fast process
Let's face it: Nobody wants his or her bankruptcy case to drag on for many months or years. Fortunately, with Chapter 7, you don't have to worry about this. While not always the case, debt is typically discharged within two to three months. After that, you can start fresh and put your financial worries in the past.
As you can see, there are many advantages to Chapter 7 bankruptcy. If you've come to the conclusion that this is the best way to fix your finances, don't hesitate to learn more.
Although you may be most interested in Chapter 7, keep in mind that not everyone qualifies. If this happens, you aren't out of luck. Instead, you'll need to consider your other options, with Chapter 13 the best place to start.