Considering bankruptcy can be a stressful period in one’s life. Bankruptcy can be very beneficial in certain situations, but in other situations, might not be the best choice of action. The best way to determine if bankruptcy is good for you is to go over certain aspects of your financial situation. There are multiple different types of bankruptcy options to consider, although most people file for chapter 7, other options might be your better bet.
When looking at your finances, check exactly how much you owe and how much money you make. If you make a reasonable amount more than your monthly payments, it’s always a much better route to just make payments on your debts to pay them off over time. This will help with your credit score, and also save you from the bankruptcy fees. If you are debating if filing bankruptcy is unethical or not just to get out of your debt, then you should make sure you have no other options. While bankruptcy is available because in a certain situation, some people have no other choice, it’s best not to take advantage of it since there are downsides that come along with bankruptcy.
Filing bankruptcy isn’t a free process; you will need to hire a lawyer, pay fees, and can even end up being rejected by a judge. Do double checking to see if you can start spending less on non-necessities and budget your money in order to save more money in the long run. If you are able to live off bare essentials, then that will be a large help in giving you options other than filing bankruptcy.
Types of bankruptcy
Chapter 7 is the most used type of bankruptcy. This option will let an individual file to have their debts discharged. Some loans do not qualify under chapter 7, such as student loans, back child support, taxes, court judgments for injuries or death to someone arising from your intoxicated driving, and other situations. This option will allow you to discharge most other debts but has a chance of you losing your property such as your vehicle, house, expensive instruments and other expensive assets.
Another popular Bankruptcy type is chapter 13, which allows you to make a payment plan for your debts if you have a regular source of income. This allows individuals to make a plan to repay their debts in full or as a partial settlement without judgments of garnishment or a levy on their bank accounts.
Chapter 11 bankruptcy is used mainly by businesses to rehabilitate or reorganize their debts. This is also sometimes used by people with substantial debts and assets. This type allows businesses to continue to operate while under financial hardship. While there are multiple bankruptcy options, make sure you choose the best one for your situation.
While bankruptcy might be a way out, it’s not always the best options to free yourself from financial hardship. Always do your research and keep in touch with your bankruptcy lawyer to make sure you are going about it in the right way. If you are able to free your self from it, make sure not to go on a spending spree once you start to see the light at the end of the tunnel. The last thing you would want is to end up in the same spot you started in.