Consumers in the U.S. carry a lot of debt. Between mortgages, car loans, credit cards, and student loans, Americans have approximately $14.9 trillion of debt. Many Americans struggle with this debt. Often, they barely make enough to cover their payments and bills with little or nothing left over for savings.
All it takes is one emergency, one unexpected bill, to start a snowball effect of debt. Payments get behind, late fees are charged, and individuals find themselves unable to get out from under the avalanche. Fortunately, by visiting https://tulsabankruptcylawyers.net/, consumers can find help getting out of debt.
Is Bankruptcy Right?
It is always recommended for those facing extreme debt to try to work things out with creditors. Many institutions will work to make an affordable payment plan. Unfortunately, this does not always work for everyone. When the debt is too extreme or there is little to no income coming into the home, bankruptcy may be the best option.
Bankruptcy is a legal proceeding that can have a negative impact on a person’s credit history. However, this impact can be far less than letting debt build-up. Poor credit can have a significant impact on many aspects of a person’s life. It can prevent them from getting future credit, employment, and even a home. Bankruptcy provides a method for getting out of debt and limiting the effects on credit.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a type of bankruptcy for those with a regular income but who cannot keep up with their debt. This is often referred to as the wage earner’s bankruptcy. This type of bankruptcy allows a person the ability to reorganize their debt in affordable payments over a specific term.
With a chapter 13 bankruptcy, consumers do not have to worry about losing assets. This can be appealing to even those with a lower income. During this legal proceeding, a payment plan is established that can be more easily afforded by the individual.
Over the next three to five years, regular payments are made that are dispersed to the various creditors. At the end of the term, any remaining debt can be discharged within certain restrictions. This provides a great way for people to gain control of their finances without losing their assets.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is reserved for those with little or no income. Those wishing to file this type of bankruptcy will need to pass a means test to ensure they qualify. Once qualified, their income, debts, and assets will be reviewed by the courts.
There are some excluded assets regarding this type of bankruptcy, including a car and home. However, any other property or assets owned by the filer will be sold off and used to pay down the debt that is owed. Once this process is completed, any remaining debt will be discharged.
Both of these bankruptcy options provide a method for consumers to get out from under the avalanche of debt. However, they both have a negative impact on a credit report for seven years. This makes it important for those considering bankruptcy to really weigh their options. It is also recommended that they speak with an attorney to ensure they are making the right choice for their situation.
