That being said, let’s dive into this issue to better understand if it’s the right path for you and the debt you hold.
Bankruptcy is more than a term: it’s the legal status that applies to you if you are unable to pay off outstanding debt. When you file bankruptcy, you enact a process that allows consumers (and businesses) to eliminate some or all of the total amount of money they owe under the protection of the federal bankruptcy court.
But for some, this action could provide a solution to serious debt situations.
In extremely simple terms, you can file bankruptcy when you owe more money than you can afford to repay. Only a select group of individuals will find this option feasible, and you should only pursue this course after learning more about what happens when you file bankruptcy instead of paying off your debt.
Check Your Rate Now Chapter 7 bankruptcy starts a process of asset liquidation.
You must liquidate all your assets in order to pay off as much debt as possible.
In other (and simpler) words, you enter an agreement that you’ll give up your assets and in exchange you get to discharge some of your debts.
This isn’t a great option for those who want to maintain what they currently possess, although there are exemptions for your property (including your clothes, your car, and some household items).
People have saved thousands by consolidating higher-interest debts using a single, personal loan, this will not negatively impact your credit.Your liquidated assets go toward repaying your unsecured debt in Chapter 7 bankruptcy.Few financial words sound scarier than “bankruptcy.” And for good reason.Declaring bankruptcy is extremely serious, and it shouldn’t be anyone’s first course of action when dealing with money problems or debt.
There are two main forms that you file for: Chapter 7 and Chapter 13.
In both, you’ll likely need to undergo debt counseling before starting the legal process.