When someone gets into financial trouble they may have questions about bankruptcy protection, an important tool to restore financial health.
There are two primary types of personal bankruptcy – chapter 7 and 13. For people with lower incomes, chapter 7 often results in a full discharge of unsecured debt on a short time line. A chapter 13, on the other hand, is a repayment plan where some of the debt is repaid over a 3 to 5 year period, at which point, remaining unsecured debt is discharged.
Although both chapter 7 and 13 get rid of unsecured debt – credit cards, medical bills and more – student loans and back taxes may not be eligible for discharge. However, many find that after discharging some debt, other debt is easier to manage.
Bankruptcy protection can be life changing in a positive way. It is important to work with an experienced bankruptcy attorney to ensure that maximum debt is discharged while taking full advantage of exemptions for property you wish to keep.
Although there are many advantages of bankruptcy protection, some worry about the negative effect filing bankruptcy will have on their credit. It is true that bankruptcy will stay on a credit report for several years, but it is the first step to rebuilding a good credit.
When you have financial troubles and have questions regarding bankruptcy protection, contact Peoria bankruptcy lawyer Charles E. Covey for answers at 309-674-8125.