Making the choice to seek bankruptcy protection is not an easy decision. Like many others, you may have misconceptions about this process, what it means for your future and what it can accomplish. In many situations, however, bankruptcy is actually the most practical way to regain control over out-of-control debt and an uncertain financial situation.
You might not know a lot about bankruptcy, which is normal. Most people don’t really understand what happens during this process and what they should expect. If you believe this is the best way forward for your financial future, you may benefit from understanding a few things before you make any major decisions.
Facts about bankruptcy
Bankruptcy is a process designed to allow individuals overwhelmed by debt to discharge certain types of balances while protected from continued collections efforts. Other things you may need to know about bankruptcy include:
- There are two main types for average consumers, Chapter 7 and Chapter 13.
- There could be debt management options available outside of bankruptcy.
- Certain types of debt, such as student loans, are not eligible for discharge during bankruptcy.
- You don’t have to drain your retirement funds before you file for bankruptcy.
- You will likely be able to keep more of your personal property than you assume.
- Depending on which chapter you file for, bankruptcy could take anywhere from a few months to a few years to complete.
- Applicants must fully disclose all of their income and debts when applying for bankruptcy.
- It can be complicated to file for bankruptcy, and there could be costs associated with the process.
There are benefits and drawbacks to bankruptcy. While it may not be your first choice, this process allows you the opportunity to pursue a better financial future for yourself and your Alabama family.
Your unique situation
There is no one-size-fits-all solution to debt problems. If you are behind on your payments, hounded by debt collectors and overwhelmed by your current financial situation, bankruptcy could be the right choice for you. As you are considering your options, you may want to seek a better understanding of the two main types of bankruptcy.
When you are making such an important decision for your future, you will want to think about your long-term interests. Looking carefully at your individual situation and the potential ways bankruptcy could benefit you will help you decide if this is the ideal option for you.