Filing for Bankruptcy: Your Options

It is a fact that many people face financial hardship. It is easy to swipe credit cards, take out a car loan, get a mortgage, and pile up medical bills. We may believe, at the time, that we can afford to pay back these debts, but things change. Here are your options when considering filing for bankruptcy.

• Chapter 7: Chapter 7 eliminates most of your debt, usually by giving up some of your assets. You may be allowed to keep certain assets under the law that are “exempt”. Property that is not exempt is sold and used to pay back creditors. This may be the choice for you if you have fallen behind on mortgage and car payments. To qualify, you must pass a “means test”.

• Chapter 13: If you do not qualify for Chapter 7 bankruptcy, you still may qualify for chapter 13. This form of bankruptcy allows you to provide a plan for paying back your debt. This usually allows you to keep your property that you may otherwise lose such as your car and home. Payments are usually your normal monthly amounts but with a little extra to help you get caught up on the past-due debt.