Although there may be a negative connotation associated with filing bankruptcy for some, it is usually the first step toward financial health for those facing difficult financial circumstances. Very few people wind up in bankruptcy because they were spending too much or irresponsible with their finances. Rather, a bankruptcy case is more often filed by someone who is dealing with a difficult situation such as the loss of a job, unexpected medical bills or simply the mounting expenses of raising a family in today’s economy.
Bankruptcy allows an individual, couples or businesses to discard or make a plan to repay significant debt in order to get their finances back on track. Many individuals file for Chapter 7 or Chapter 13 bankruptcy, depending on the specifics of their situation. Chapter 7 provides for liquidation, which includes the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors in order to get a clean slate. Chapter 13 provides for adjustment of debts of an individual with regular income allowing a debtor to keep property and pay debts over time, usually three to five years.
While many are reluctant to file bankruptcy, sometimes there is little choice. Although there is the presumption that filing bankruptcy will destroy your credit, there are cases where it actually proves beneficial to the credit report and helps build credit going forward. Certainly, an important first step is getting information about what financial strategy can work for you and the consequences of each action. If you are struggling with a difficult financial situation, Attorney Charles E. Covey can help you decide if bankruptcy is the best option for you.