Most recent statistics and analyses of the economy point to some good news. As a general rule, the economy is improving overall. But that doesn’t mean families aren’t still struggling to get by and recovering from economic hardships from the last few years. The big picture may be getting a little better, but there’s no doubt many individuals are still struggling.
The trouble is that even as the economy improves — or at least becomes a little more predictable — people can’t always trust banks to best represent the interests of their families. Too often, banks use the system they designed to take advantage of borrowers.
Getting informed on bankruptcy
Your best line of defense is to get informed and get a real picture of your financial situation and the options that are available to you. Then you can speak to an attorney or someone else who will be able to represent your financial interests.
Bankruptcy is one financial area that’s littered with misinformation which often confuses people as to the best way to proceed. But the fact of the matter is, it’s a valuable financial tool to individuals and families that are struggling to get their expenses or debts under control.
If you’re considering filing for bankruptcy, you first need to figure out if Chapter 7 or Chapter 13 bankruptcy is better for your financial situation.
Chapter 7 vs. Chapter 13
Most people can tell you the main difference between Chapter 7 and Chapter 13 bankruptcy is that with Chapter 7, you don’t ever have to repay most of your debts. That may sound tempting, but the real differences between the two forms of bankruptcy are a little more complicated than that. If you have a lot of assets, especially wrapped up in your home, or a steady income, Chapter 13 bankruptcy may be a better option for you and your family. It best serves people who don’t want to lose their homes to the bankruptcy process and people who are earning a steady living but can’t keep up with scheduled payments on the debt they’ve accumulated over their lives.
Some of the benefits of Chapter 13:
- You can get an extension on the time you have to pay back past debts — between three and five years depending on your specific situation.
- Repaying those debts will take the form of one monthly payment to the bankruptcy trustee. That means no more calls or contact from debt collectors.
- You will keep most of your property.
If you have fewer assets and don’t have enough income to cover your expenses each month, Chapter 7 bankruptcy is probably your best bet. Some of the upsides of Chapter 7:
- Most unsecured debts can be permanently discharged.
- Creditors won’t be able to contact you while you’re working through the process or after your debt has been discharged.
Finding the solution that works for you
Both of these forms of bankruptcy have their pros and cons. The key is to gather as much information as you can before you start making decisions. Working with experienced bankruptcy lawyers is one excellent way to explore your options with someone who has your best interests at heart.