The decision to get a do-over on your financial situation may prove the better path towards easing the debt burdens. Once you want to move forward, you must decide which type of bankruptcy will work better for you.
Many misunderstand the Chapter 7 bankruptcy process. With so many horror stories and myths about bankruptcy, it helps to get a basic sense of what things mean.
What does Chapter 7 do?
Bankruptcy under Chapter 7 allows you to eliminate all outstanding debt, with a few exceptions. The trustee who oversees your proceeding will tally up your assets and debts and recommends what property can sell to pay for what debts. Secured debts, such as your primary residence and a vehicle, may remain safe, even if you are behind on those. However, any account you have maintained in good standing will not roll into your bankruptcy, meaning you can keep it.
When is Chapter 7 the better option?
Chapter 13 bankruptcy allows those who want to keep most or all of their property to enter into an installment plan to get on track. Under Chapter 7, however, this is not the case. If you are fine with letting go of certain debts without much payment, it is the better option. For instance, if you want to wipe out debt and return items secured with collateral, such as a boat, then Chapter 7 allows you to do this.
Your home and vehicle remain safe under Chapter 7 and your retirement fund. Your trustee and attorney will walk you through the proceeding and help you decide what does and does not go.