If you are falling behind in your bills and struggling to pay off delinquent debts, then bankruptcy may be an option for you to consider. Many people in Pennsylvania file for bankruptcy every day. The opportunity to have certain debts discharged or erased to gain a new financial start is tempting, but there are rules and stipulations in place that may or may not work well with your situation. Before you start filling out any paperwork, you should take a moment to learn if it is the best choice for your circumstances.
When filing for bankruptcy, you have two options to consider: Chapter 7 and Chapter 13. Both can improve your financial situation, but the rules to qualify for and participate in them are different. Chapter 7 bankruptcy provides you the opportunity to have your unsecured debts discharged so you can have a clean slate to start over. There is the risk of having your assets, such as your house and car, sold to help satisfy those debts. But, exceptions may be available for your situation that allow you to keep your house and one car. Also, some debts like student loans, alimony, child support and taxes are not dischargeable.
Chapter 13 bankruptcy does not allow the discharge of any debts until you complete the payment plan. You gain the opportunity to repay what you owe by making payments that are more favorable to your current financial situation. Depending on your circumstances, you may also get the chance to have your debts reduced. With Chapter 13, you will need to establish a payment plan that does not exceed the amount of time allowed by the courts to pay off your debts. The courts will decide if you should pay off all your debts or a portion of them. Many people choose Chapter 13 bankruptcy because they can keep their homes, cars and other assets if they meet all requirements and stay current on their payments.
Both types of bankruptcy can have an adverse effect on your credit that may make it harder for you to open new lines of credit right away. However, the impact of negative payments, collection accounts and charge-offs can linger on indefinitely, making it harder for you to prove your financial worthiness.
Bankruptcy is not for everyone, and there are eligibility requirements that you must meet. You know your situation better than anyone else. Do not let the stigmas associated with it or your fears keep you from gaining the financial relief you seek. If you need more help deciding if bankruptcy is right for you, or you are ready to start the process, you should speak with an attorney for guidance.