what you have to pay off some of your debts while having the rest forgiven.
Description
Bankruptcy is a federal legal process that allows individuals or businesses to have their debts forgiven while providing some repayment to their lenders. The most common types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 is a relatively quick process if you qualify. If you have a higher income, though, you may only qualify to file for Chapter 13, a longer process aimed at repaying rather than eliminating your debts. Bankruptcy decisions are made by a federal bankruptcy judge. The judge’s decisions are carried out by an officer called a trustee who decides how your assets will be used to repay your lenders. This Investopedia article describes how it works. Many people hire a lawyer to help them file for bankruptcy, but you can file without a lawyer if you feel you have the time and attention to detail to do the job yourself. The process is complex but predictable, and you could lose your case if you file incorrectly. Finally, you’ll probably need to take a credit counseling course before filing, so bankruptcy is not a shortcut.
- This Nolo article describes the process for filing for Chapter 7 bankruptcy.
- This Nolo article describes the process for filing for Chapter 13 bankruptcy.
A bankruptcy attorney can help you navigate the process of filing for bankruptcy quickly and correctly, insuring that you have the best chance of winning your case. This NerdWalet article lists some questions you should ask before hiring a bankruptcy attorney such as:
- Chapter 7 or Chapter 13?
- Can you afford it?
- Will it actually help?
- Can you qualify for bankruptcy?
- Will you be able to live with the effects for years to come?
This Investopedia article explains when filing for bankruptcy is appropriate.