If you may have to enter into bankruptcy, you'll want to know exactly what's going to happen. A personal bankruptcy may seem like it's going to ruin you, but the reality is that it could be beneficial. Personal bankruptcy helps you get out of debt without paying everything you owe, focusing on liquidating your assets while excluding assets that fall into special categories. The goal of the bankruptcy isn't to ruin your life; it's to help you get back on track.
Bankruptcy isn't the only way to get out of debt, but it's a good choice in a few situations. For example, if you have attempted to negotiate your debts and have no way of increasing your income, bankruptcy might be a good option moving forward. Likewise, if you've already damaged your credit, then bankruptcy isn't likely to do much more to hurt it.
You have two options when it comes to bankruptcy, liquidation and reorganization. With Chapter 7, you liquify your assets to pay back what you owe. With Chapter 13, you make payments for three to five years and have the remaining debts forgiven. Bankruptcy doesn't eliminate tax debts, student loans or certain other secured debts, so keep that in mind if you plan to file. Chapter 13 bankruptcy is deleted from your record seven years after you file, while Chapter 7 stays on your record for 10 years.
Bankruptcy could be the right option for you. Look into the possibilities before you decide, so you know that this is the right choice. With so many ways to get out of debt, bankruptcy is just one possibility.
Source: USA Today, "Going bankrupt? Here's what really happens when you file for bankruptcy," Judith Ohikuare, May 05, 2018