Which Bankruptcy is Right for Me?

by Lee Wyatt
(last updated August 23, 2013)

When you find yourself in serious financial trouble, it only makes sense that you would ask yourself the question of "Which bankruptcy is right for me?" While many people would like to think that one bankruptcy will fit all situations, this is not the truth. Reality is that not everyone can, or even should, file for bankruptcy. If you are considering this drastic step, then make sure you are thinking about all of your options. Here are a few things that you can use to help you determine which, if any, bankruptcy will be right for you.

  • Chapter 7. Chapter 7 is the type of bankruptcy that most people think about when they do think about bankruptcy. This is perhaps the single most traumatic kind of bankruptcy, and will require quite a bit of sacrifice on your part, in that you will need to sell of the vast majority of your assets and possessions. In fact, there are only a few things that you won't need to sell off, and most of those are related to you living on a daily basis. In addition, this type of bankruptcy will remain on your credit history for 10 years.
  • Chapter 13. Unlike Chapter 7 bankruptcy, Chapter 13 is more along the lines of creating a formal payment plan for repaying all of your debts. This type of bankruptcy is often referred to as a restructuring or reorganizing bankruptcy. One of the more common uses for this type of bankruptcy is to avoid foreclosure, but you need to be aware that this doesn't always work in holding it off. Be aware that this type of bankruptcy will remain on your record for about seven years.
  • Be aware of consequences. Regardless of how long the bankruptcy will officially remain on your credit history, this is a process that will affect the rest of your life. A very simple example of this is how many job applications will ask whether or not you have ever filed for bankruptcy, and how long ago it was. While, strictly speaking, a bankruptcy cannot be a single disqualifying factor in whether or not you get a job, it does play a role.
  • Get counseling and advice. Before you make any decision regarding bankruptcy, you really should get professional advice. This means that you need to talk to both a professional credit counselor and a bankruptcy attorney. The attorney can tell you how the bankruptcy process will work in great detail, and which type of bankruptcy will work for you. A credit counselor can also help you determine whether or not you even need to file bankruptcy. Essentially, a professional should be able to give you advice that will better suit your exact needs and situation.

Author Bio

Lee Wyatt

Contributor of numerous Tips.Net articles, Lee Wyatt is quickly becoming a regular "Jack of all trades." He is currently an independent contractor specializing in writing and editing. Contact him today for all of your writing and editing needs! Click here to contact. ...

MORE FROM LEE

Employee Time Management

When most people hear the term employee time management, they tend to get visions of some harsh taskmaster standing over them ...

Discover More

Adding an Outdoor Receptacle

There are times when you find yourself simply needing another electrical outlet or receptacle more than you currently have. ...

Discover More

What to Do When You Run Out of Gas

Just about everyone will go through the experience of running out of gas at least once in their life. If you have never done ...

Discover More
More Money Tips

Life After Bankruptcy

Bankruptcy is a life changing event. Life after bankruptcy requires a paradigm shift on saving and debt.

Discover More

Questions to Ask a Bankruptcy Attorney

If you are thinking about filing for bankruptcy, you may want to think strongly about hiring an attorney. However, there ...

Discover More

Finding a Bankruptcy Lawyer

Most people run from them screaming, but if you're going through bankruptcy, you may want to pluck up the courage to hire one ...

Discover More
Comments

If you would like to add an image to your comment (not an avatar, but an image to help in making the point of your comment), include the characters [{fig}] in your comment text. You’ll be prompted to upload your image when you submit the comment. Maximum image size is 6Mpixels. Images larger than 600px wide or 1000px tall will be reduced. Up to three images may be included in a comment. All images are subject to review. Commenting privileges may be curtailed if inappropriate images are posted.

What is 9 - 2?

There are currently no comments for this tip. (Be the first to leave your comment—just use the simple form above!)