Bankruptcy is a legal protection that helps people to take control of their finances by allowing them to use a process overseen by the court. Two types of bankruptcy are commonly used by consumers – Chapter 7 and Chapter 13.
In a Chapter 7 bankruptcy, the person doesn’t have to make payments to the trustee, but the qualified debts are discharged at the end of the process. In a Chapter 13 bankruptcy, the person will make regular payments to the trustee for a set period. Any balances remaining at the end of that period are discharged.
1. You may learn better money-management skills
Before you file for bankruptcy, you have to have a credit counseling session. This is a time for you to get a deeper look at your finances and determine if bankruptcy can help you. When you’re done, you should have a better understanding of your financial situation.
After you file, you have to take a debtor education course. This is a two-hour course that can help you to learn more about how to remain out of debt in the future.
2. You may have more money for non-dischargeable debts
Not all debts are dischargeable under bankruptcy. By having some of your debts discharged, you may find that you have money left that you can use to start to pay down some of the non-dischargeable debts.
Filing for bankruptcy is a responsible decision for many adults. If you need to take control of your finances, this might be a viable option. Learning a bit about this process from someone knowledgeable could be beneficial.
