If you have what feels like an insurmountable amount of debt, you may want to consider bankruptcy to get a fresh start. Filing bankruptcy can help you erase certain debts and gives you the opportunity to move forward financially.
Bankruptcy is a common experience for many. From the period starting in June 2019 and ending in June 2020, 682,363 bankruptcy filings occurred in the U.S., states the United States Courts. Although many people file bankruptcy, there are several things to consider before you move forward with this legal action.
Check your eligibility
There are two types of consumer bankruptcy: Chapter 7 and Chapter 13. Depending on your income and assets, you may not be eligible to file for Chapter 7 bankruptcy. If this occurs, you may still be eligible to file for Chapter 13 bankruptcy.
Consider debts bankruptcy will not erase
It is a common myth that filing for bankruptcy automatically erases all debts. Some types of debts, like child support payments, student loans and tax payments, will remain even after you file for bankruptcy.
Take into account your personal life
During the bankruptcy process, you have to disclose details about your finances to the court, which can be an intrusive process. Consider if you are ready for the personal, emotional and financial implications of going through this legal process.
Bankruptcy can have a significant effect on all facets of your life, ranging from your credit score to your ability to stay in your home. But it still may be a beneficial process to help you get away from significant debt and financial stress.