The thought alone of filing for bankruptcy is enough to kick your mind into overdrive. If you begin to listen to others, such as those who are opposed to bankruptcy, you’ll face additional stress and challenges associated with the process.
Bankruptcy is not a punishment for something you did wrong. Instead, it’s a tool for getting your finances back on track so you can live a better life in the future.
There is no easy way to decide if bankruptcy is a good idea for you. This depends largely on your personal situation and what you’re trying to accomplish.
Here are some details you can review to determine if bankruptcy makes sense:
- The types of bankruptcy: As an individual, Chapter 7 and Chapter 13 bankruptcy is where you’ll turn most of your attention. There are pros and cons to both types, so learn more about what it can and can’t do for you.
- Alternatives: There may be a better way to get your finances back on track, such as debt consolidation or counseling. It never hurts to learn more about alternatives to bankruptcy, as the knowledge you collect will guide your decision.
- What will happen to your assets, debts: For example, you need to know if there is potential to lose some of your assets, such as your car, if you file for bankruptcy. Just the same, understanding which debts are discharged will help you make a final decision.
- The process: Chapter 7 and Chapter 13 bankruptcy are unique with respect to the way the process unfolds. Chapter 7 bankruptcy allows you to discharge some or all of your debt, typically within 90 days of filing. Chapter 13, however, requires you to use a repayment plan that lasts three to five years.
There’s no good reason to ignore bankruptcy. It may not be the right choice for you at the present time, but it doesn’t cost anything to learn more.
Once you understand that bankruptcy is a tool for getting your finances back on track, it’s easier to learn more about the process and the steps you can take to put the wheels in motion.