For those who have debt, which is a large percent of the population, dealing with it is tough. It’s more than just dealing with it, to fix your finances and get on track, you have to get rid of it. There are several ways to deal with this money problem and get rid of debt. The best way is to pay it off because it will keep you from hurting your credit while getting rid of it. You can make it easier to pay off by consolidating or settling your debt, but sometimes this is still not enough. What can you do when there’s no where else to turn?
Filing bankruptcy is a last resort. When you’ve tried making monthly payments, consolidating, and settling debt as much as you can and you still can’t handle your monthly payments, bankruptcy is the final place to turn. It will wipe your debt clean and let you start over, albeit difficultly. When you declare bankruptcy, it will hurt your credit. Damaged credit, especially when you have bankruptcy on your report, will make it difficult to rent an apartment, get car insurance, and get a job, and nearly impossible to get any kind of loan.
There are two types of personal bankruptcy that are most commonly used which are chapter 7 and 13. Chapter 7 bankruptcy is when your assets are liquidated and the remaining debt, except for exempt debt, is discharged. It has become increasingly difficult to file chapter 7, and many more people are being forced to file chapter 13 instead.
With chapter 13 bankruptcy, you don’t lose any of your assets. Instead of getting your assets liquidated and your debts discharged, your trustee sets up a payment plan for you. They will make it easier to pay off the debt. If after a predetermined period of time you have made the rest of your payments on time and you have debt leftover, you may have the remaining debt discharged.