Many Americans find themselves in extreme debt with no recourse to pay. The United States Courts report that there were over 750,000 non-business bankruptcy filings in 2019, with over 773,000 cases in total.
If you find yourself in serious debt, you may have considered Chapter 7 bankruptcy as a way to discharge the amount. However, other options may exist and understanding which might best suit you can help you gain better control of your finances.
The ability to file
There are certain conditions for filing Chapter 7 bankruptcy. For example, your total debt must exceed your income. If you are unemployed and have no current income, it is likely you qualify to file. You may have to provide proof of hardship and an inability to pay before you are allowed to file.
Chapter 7 vs. chapter 13
Choosing a bankruptcy type that best suits your situation can have a serious impact on your financial future. Chapter 7 erases or discharges your debt completely, while chapter 13 reorganizes what you owe and provides you with a repayment plan you can manage according to your income. With Chapter 13, you may have to surrender property to help repay your debts, such as vehicles and real estate.
Making the right choice
A financial advisor or bankruptcy lawyer can assist you in making decisions about your bankruptcy case. It is important to remember that while Chapter 7 bankruptcy may discharge your debts, it can impact your ability to take out loans in the future.
While cases of personal bankruptcy are falling, many people still find themselves unable to repay their debt. Making an informed decision about declaring Chapter 7 bankruptcy may help you protect your financial future.