When you feel like you cannot get your personal debt under control, filing for bankruptcy can be an attractive option. For many individuals, bankruptcy is the key to having their debts discharged and moving forward with their lives. Although bankruptcy can be a great tool, it is likely not your only option. Depending on your circumstances, you might be better suited to one of the bankruptcy alternatives discussed below.
When you file for bankruptcy, you are required to receive credit counseling from a qualified source. This is to help you gain insight about how debt and credit work, how you got into your particular situation, and to help you develop strategies that you can use to avoid going into unmanageable debt again in the future.
If you are currently going through the bankruptcy process or have recently completed it, you are probably hearing and reading advice from many different sources. The advice you receive might be contradictory or inconsistent, with some parties advocating strategies that would not work in your situation or seem like they would get you back into debt, rather than help you stay out of it. One piece of advice you have undoubtedly received is to take steps to rebuild your credit. But how?
Filing for bankruptcy could be one of the best decisions you ever make, but it is a decision that has consequences and should not be taken lightly. In fact, bankruptcy might not be the right choice for you, depending on your circumstances. Before making any drastic decisions about how to manage your debt, consult with an experienced bankruptcy attorney.
Keep these long-term consequences in mind as you learn more about the topic.
Bankruptcy Stays on Your Credit Report for Years
There are a lot of differences between Chapter 7 and Chapter 13 bankruptcy. You need to know these differences before you file for bankruptcy – depending on your circumstances, you might only be eligible for Chapter 13 bankruptcy. Even if you are not limited to this type, it might be a better choice for you than Chapter 7. Talk to an experienced bankruptcy attorney about the differences between Chapter 7 and Chapter 13 bankruptcy to determine which type is best for your situation.
When you are facing a significant amount of personal debt, the options you have depend largely on your individual circumstances. Filing for bankruptcy is a deeply personal decision that will affect your credit and other areas of your financial life for years after filing. Work with an experienced bankruptcy attorney to determine your options before you make this decision.
Those who need to rid themselves of their debt or are unable to pay off their debt may consider filing for federal bankruptcy. Individuals, municipalities, businesses, international parties, and even family farmers are able to file bankruptcy in federal court. When the court grants bankruptcy petitions, the debtor is resolved of debt in its entirety or is provided with a plan to pay off the debt over time.
The Department of Education has released new guidance on how creditors may handle bankruptcy discharge requests for government-funded student loan debt. This guidance seeks to balance collecting student loan debts versus allowing the debts to be discharged. Through this guidance, the Department of Education advises guaranty agencies to be more careful when considering under what circumstances they will challenge borrowers in court who are claiming undue hardship in order to have his or her debt discharged.
Debt is a familiar reality to many Americans. However, contrary to popular perception, debt is not inherently bad. When people understand how to manage debt responsibly, they can improve their credit score and acquire loans. Responsible debtors have more opportunity when it comes to buying a home or starting a business. Unfortunately, unexpected circumstances can put debtors in a position where they cannot make payments. An injury or a natural disaster, for example, can produce steep expenses, and in these cases, one viable option may be filing bankruptcy.
To say “every American has debt” is not so far from the truth. According to some reports, American consumers owe $11.63 trillion in debt as of Sept. 2014. That is more than half of the country’s national debt.
Although debt is not inherently evil, it has reached unbearable levels for many Americans. For some, proper budgeting and prioritization of purchases can help; for others, however, bankruptcy might be worth considering.