Everyone may come across difficult times in life. When you break up with your loved ones, or you lost your family members, or you suffer from great financial loss.
It’s hard to live without money, especially when you have a lot of debts to repay. At that time, you may hope you can get rid of all this mess and welcome a new start. Bankruptcy may help you then.
Bankruptcy is not only for businesses, but also for individuals. When you can’t repay your debts and find life is difficult, you can apply for bankruptcy for a new start.
Bankruptcy stats with a petition of the debtor, which is most common, or on behalf of creditors. It is a legal proceeding. Once you apply for bankruptcy, all of your assets will be measured and evaluated, and the assets may be used to pay back a certain portion of your debts.
There are two types of bankruptcy for individuals according to the Bankruptcy Code.
Chapter 7 Bankruptcy
If you have few or no assets, you can file Chapter 7 bankruptcy. It allows you to dispose your unsecured debts, such as credit cards and medical bills. Basically, you are selling your assets to clear debts.
Chapter 13 Bankruptcy
If you are earning money and not qualified to Chapter 7, you may file under Chapter 13, which is also known as a wage earner’s plan. It allows you to make workable debt repayment plans.
Bankruptcy gives you some advantages. It can help you relieve from legal obligation to pay your debts, depending on what type of bankruptcy petition you file. It gives a fresh new start to you. You can start your life again after applying for bankruptcy.
However, there are more disadvantages. Declaring bankruptcy may lower your credit rating. You may find yourself much harder to get a loan, mortgage, credit card, or buy a home, apartment, or business in the future.
Every coin has two sides. When you make a decision, you should consider both the advantages and disadvantages. Hopefully, none of us will declare bankruptcy one day. But if you have to, think it over and choose the right filing.