Debt can be a huge source of anxiety and stress for anyone. Whether caused by an unexpected medical expense or a job loss, debt can be overwhelming and difficult to manage.
For many people, bankruptcy may seem like a last resort option. But before you start worrying, it’s important to understand the different types of bankruptcy and how they work.
What should you know about bankruptcy and how can it alleviate the burden of debt? How can it help you not fret about debt?
What is Bankruptcy?
Bankruptcy is a legal process that allows individuals and businesses to eliminate or restructure their debts. It’s a way to get a fresh start and move forward without overwhelming debt. There are two main types of bankruptcy for individuals: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy is liquidation bankruptcy. It’s designed for people with few assets and no ability to afford their debts. In a Chapter 7 bankruptcy, the trustee sells a person’s non-exempt assets to pay off as much debt as possible. Once they sell the assets and pay creditors, the court discharges most or all remaining debts.
Chapter 13 bankruptcy allows individuals to restructure their debts and pay them off over three to five years. This type of bankruptcy is designed for people who have a steady income and can afford to pay back a portion of their debts.
What Debts are Dischargeable?
Not all debts can be discharged in bankruptcy. Non-dischargeable debts include:
- Child support
- Most taxes
- Most student loans
- Debts incurred through fraud or illegal activity
Dischargeable debts include credit card debt, medical bills, and personal loans.
What are the Consequences of Bankruptcy?
Filing for bankruptcy will impact your credit score and financial standing. It appears on your credit report for up to 10 years and makes creditors reluctant to extend you credit in the future. However, the impact of bankruptcy will decrease over time and you can start rebuilding your credit immediately after filing.
Bankruptcy can be a difficult decision to make, and it’s important to understand the consequences before proceeding. However, bankruptcy can also be a way to get a fresh start and move forward without overwhelming debt. If you’re considering bankruptcy, it’s important to talk to a qualified bankruptcy attorney to understand your options and make an informed decision. Don’t let debt hold you back. With the right support, you can take control of your financial future.
Don’t fret about debt. For more information about bankruptcy or if you need help dealing with overwhelming debt, contact the Law Offices of Robert M. Geller at 813-254-5696 to schedule a free consultation with an experienced attorney.