If you are struggling with overwhelming debt, you are likely wondering if you will ever recover and move forward from your current circumstances. In specific situations, consumers may be able to find relief through bankruptcy, a process that allows an applicant to seek relief from certain types of debt once and for all. There are different types of bankruptcy, and the ideal choice depends on the type of debt you owe, among other factors.
Bankruptcy may not be your first choice, and you may feel hesitant to move forward with such a serious step. Certain misconceptions about how this process works often keep individuals from making a decision that will be ideal for their financial future. If you are unsure of what is best for you, it might be helpful to seek a more complete understanding of the bankruptcy process.
Chapter 7 and Chapter 13 bankruptcy
Chapter 7 bankruptcy is a popular choice for overwhelmed Alabama consumers because it is complete within a few months. It is ideal for unsecured debt, which includes medical debt, credit card debt and lines of credit. During Chapter 7, there will be a discharge of certain balances, and the applicant will emerge with less debt. There are certain requirements associated with Chapter 7, and if an individual earns over a certain amount, he or she may not be eligible for this specific bankruptcy option.
Chapter 13 is a beneficial option for those who have a significant amount of secured debt for those who are not eligible for Chapter 7. This process takes three to five years, during which the applicant will follow a debt repayment plan. Chapter 13 typically allows the applicant to keep his or her assets, such as the family home.
Benefits of bankruptcy
Bankruptcy offers you a way out of your current circumstances. Your debt may be overwhelming, but you may find that either Chapter 7 or Chapter 13 allows you to address current concerns and pursue a better and stronger financial future. While under bankruptcy protection, you will enjoy the benefits of the automatic stay. This halts all contact from debt collectors and creditors, as well as collection efforts, such as wage garnishment.
If you are struggling with debt, you will benefit from an explanation of how bankruptcy works and how it could benefit you. When considering how to best deal with your debt concerns, you will want to consider what is most prudent for your long-term interests.