After falling behind on your payments and accumulating a significant amount of debt, you could face various consequences that may affect multiple areas of your life. One of the most significant ways that debt can affect you is through debt collection efforts, including constant or harassing contact from collection agencies, wage garnishment and foreclosure. If you are struggling with these matters, you likely want to find a way out and a better financial future for yourself.
Bankruptcy is an organized legal process that provides applicants the opportunity to effectively deal with certain types of debt. While this may not be your first choice, it is an option that could offer you the opportunity to secure a better and stronger financial future. If you are considering this as a potential solution for your ongoing debt problems, you may benefit from learning more about what to expect from this process.
Steps you will take during bankruptcy
You will first need to determine which chapter of bankruptcy is best for your specific situation. The most common options for consumer bankruptcy are Chapter 7 and Chapter 13. Each have specific eligibility requirements, and each offer different benefits according to the type of debt you owe. The following facts about the bankruptcy process and what it can mean for you may be helpful:
- After you file for bankruptcy, the automatic stay will go into effect. This halts collection efforts, including garnishment of wages and phone calls from creditors.
- Bankruptcy laws provide applicants with exemptions that allow them to keep most of their personal property after filling.
- Bankruptcy will stay on your credit for a time, even after the process is complete. You will benefit from understanding how this may impact employment, vehicle purchases and housing applications.
- Bankruptcy can allow you to discharge certain debts or pay off balances over a period of time. Certain debts are not eligible for discharge, such as student loans.
- Chapter 7 can take a few months to complete, while Chapter 13 may take a few years to complete.
An assessment of your specific types of debts and other details will help you understand which chapter of bankruptcy is right for you and how it can benefit your situation. This process may offer you a way to achieve a better financial future after struggling with unpaid balances, creditor harassment and unmanageable debt.