You may be in a bit of financial trouble, and you need to know that you have options. One of the things you may have come across is bankruptcy. A big question you may be asking yourself is if you should file for bankruptcy. There are many myths about it that make it seem like a negative choice, but truthfully, it can have many benefits to you financially.
There are two types of bankruptcy that an individual will typically use. These include Chapter 13 and Chapter 7 bankruptcy. Chapter 7 is where you liquidate your non-exempt assets to pay off your debts. Most people think of this kind of bankruptcy when they consider going into bankruptcy. Chapter 13 bankruptcy is another options, which allows you to adjust and reorganize your debts, placing them onto a payment plan. This can help you avoid having to sell or worry about foreclosure on your home.
The advantages to bankruptcy range, but the immediate benefit is known as the automatic stay. This notice tells creditors to stop trying to collect money from you. That means you won’t get any more phone calls, threats of lawsuits or wage garnishments. This can help you refocus on your debt as you decide how to move forward.
Another benefit of bankruptcy is the potential for some debts to be discharged. After you pay the agreed sum, the remainder may be “erased” and eliminated by the court. Then, you won’t be held liable for the extra debts that have been discharged. This is helpful when you’re trying to reduce credit card debts, for instance, because interest could be eliminated.
Source: Quick and Dirty Tips, “Should You File Bankruptcy?” Laura Adams, accessed Mar. 19, 2015by