Chapter 7 bankruptcy is a great kind of bankruptcy to consider if you’re struggling with debt. It is also known as liquidation bankruptcy because you sell some of your liquid assets to pay back what you owe.
Of course, the truth is that you may not be able to afford to pay back everything you owe, or you wouldn’t be in this position. That’s why Chapter 7 bankruptcy is set up to help you protect important and necessary assets and to limit how much you have to pay back to your creditors. Once you meet the conditions of the bankruptcy and emerge, any remaining debts are discharged.
Is bankruptcy a good option for your situation?
That question can only truly be answered by working with your attorney and looking at the options available to you. Some people who qualify for Chapter 7 bankruptcy try other options first. Some other debt-reduction or elimination methods include:
- Consolidating debts to lower payments
- Negotiating to make lump-sum payoffs of debts
- Renegotiating monthly payments
Not all people end up working through a bankruptcy, but if you feel that you won’t be able to reduce your debts enough through other means or have tried them to no avail, then you shouldn’t be scared to try bankruptcy.
With a Chapter 7 bankruptcy, many of your necessary assets are protected. Talk to your attorney more about the exemptions that are in place because you may be surprised at how many of your possessions you’re able to keep while still gaining the protection and ability to start over fresh with bankruptcy.