Like in business bankruptcy, individuals are able to file bankruptcy if they are unable to handle their financial burdens, in order to have their debts cancelled, paid through liquidation of their assets or reorganized into an affordable repayment plan. Some debts cannot be eliminated, such as secured debts, alimony, taxes, child support, and sometimes student loans. Bankruptcy can be used to help you from being foreclosed on your home or to save your valuable personal assets.
Chapter 7 Personal Bankruptcy
Chapter 7 bankruptcy enables people to discharge certain debts they owe and get a fresh start. Debts that are dischargeable under Chapter 7 bankruptcy law include but are not limited to medical bills, credit cards, car accident claims, student loans, overdue rent and utility payments, and personal loans.
Chapter 13 Personal Bankruptcy
Chapter 13 bankruptcy enables people that are self-employed or otherwise managing an unincorporated business to seek debt relief while protecting valuable assets. People who file Chapter 13 are usually high-income earners and/or have valuable property and other high-priced items they do not want liquidated as part of a bankruptcy. Chapter 13 gives people the opportunity to have debt relief and pay off their creditors, agreeing to an affordable repayment plan that allows them to repay their creditors over three to five years.
Should I File for Personal Bankruptcy?
Filing for personal bankruptcy is a huge decision that should not be made lightly. In many situations, though, it is the best option for people to realistically regain control of their finances. Before you decide to file for bankruptcy, you should research bankruptcy as well as alternatives to bankruptcy. In addition, you should talk to an experienced bankruptcy lawyer about your situation.