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Different types of bankruptcy have their advantages

Most of us will go through financial difficulties at some point in our lives. If you find that your financial struggles are becoming overwhelming, filing for bankruptcy may be one option. Making the decision to declare bankruptcy can be one of the hardest decisions you ever make, but it will be worth it to be able to eliminate most of your debt and move forward with a clean slate.

Before you file for bankruptcy in Long Beach, you should be aware that there are different forms of bankruptcy. Businesses will typically file for bankruptcy under Chapter 11, while individuals will often file for bankruptcy under Chapter 7 or Chapter 13. If you are unable to repay your debts, Chapter 7 bankruptcy may be an option. It allows the court to sell many of your assets to cover as much of your debt as possible and dismiss any remaining debt. If you do not qualify for Chapter 7 bankruptcy, or you plan to repay your debt, Chapter 13 bankruptcy is an option. Chapter 13 allows you to hold on to your assets and work out a repayment plan with the court.

Generally, there are many advantages to filing for bankruptcy. The main benefit of bankruptcy is that it allows you to have your debts wiped clean after settling with your creditors for less than what you currently owe. Keep in mind that certain types of debts cannot be discharged even through bankruptcy, including student loans, owed taxes, child support and alimony. Also, you can improve your credit over time post-bankruptcy by paying your bills on time, acquiring a secured credit card and not accumulating more debt.

Declaring bankruptcy will have a significant impact on your personal and professional life and long-lasting consequences. However, sometimes it is the preferred option for those who are facing overwhelming debt and are looking for a way to move forward on fresh financial footing.

Source: U.S. News, "Here's How to Survive Bankruptcy," Steven Abrams, April 17, 2018

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