For many people who find themselves in a financial jam, a second chance would be nice.  It doesn’t take long before bankruptcy is considered.  Prior to concluding upon that route, it may be best to consider if this is truly the best route to take.  After considering what bankruptcy is and does, people are able to make education decisions as to their next step.

 

Bankruptcy is a process by which a consumer or business may be able to reorganize or be excused their debts under the protection of the courts.  When filing for bankruptcy, there are typically two main methods: filing a chapter 7 or a chapter 13

 

A chapter 7 will essentially allow you to dissolve your debts in order to start over.  On the other hand, chapter 13 will allow you the protection of the courts to determine how you will reorganize or repay your debts under a new timeline and plan.  Depending on what you can afford, some debts must be repaid entirely while others may only need to be repaid partially or not at all.

 

When considering these two, there are some very important catches and considerations.  Although many assume that bankruptcy may offer a clean sweep of your debts, even a chapter 7 filing may not rid your financial record of everything.  For instance, student loans, IRS payments, child support, and alimony typically stay with an individual and must be paid.   If after assessing your current financial situation you find yourself hampered with alimony and child support as the leading cause of financial frustration, perhaps bankruptcy isn’t the wisest choice to consider.  On the other hand, if the excessive debt has been the result of medical bills unpaid, counseling with bankruptcy lawyers may be quite helpful.

 

It is also helpful to consider that when filing, your credit score will be affected, on average, by 150-230 points.  This could cause further issues when attempting to rent within many apartment complexes who run credit reports in order to ensure your financial integrity.  Although it will be very difficult to get a loan or credit card to your name, when someone gives you the chance, the interest rates tied to those loans will be high enough to mitigate as much risk as possible for the lender.

 

If after considering what bankruptcy is and what it is not, if you feel that bankruptcy is a good option, contact bankruptcy attorneys now.  The bankruptcy lawyers will be able to sit down with you and assess your debts and the legal work needed to overcome your garnishments and allow yourself a second start at life.