{"id":286968,"date":"2016-04-04T10:41:54","date_gmt":"2016-04-04T15:41:54","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/bankruptcy\/what-is-bankruptcy\/is-bankruptcy-a-good-idea-for-you.html"},"modified":"2024-06-10T10:29:23","modified_gmt":"2024-06-10T15:29:23","slug":"is-bankruptcy-a-good-idea-for-you","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/what-is-bankruptcy\/is-bankruptcy-a-good-idea-for-you.html","title":{"rendered":"Is Bankruptcy a Good Idea for You?"},"content":{"rendered":"\n
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Is Bankruptcy a Good Idea for You?<\/h1>\n
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\n By Christie Nicholson, J.D.<\/a> | Legally reviewed by Susan Mills Richmond, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Deciding whether to file for bankruptcy is difficult. Most people try hard to pay their debts. Unfortunately, there may come a time when you’re in over your head, and bankruptcy is the only solution.<\/p>\r\n

You should consider many factors before making this decision. Bankruptcy isn’t for everyone. You may find that you are judgment proof<\/a> or believe you can fix your financial woes with a few simple changes. You may talk to a credit counseling agency or debt consolidation<\/a> company to work out a reasonable payment plan with your creditors. If these are not viable options, you may decide that bankruptcy is the only way to get true debt relief<\/a> and a fresh start.<\/p>\r\n

Here, we’ll explain the different types of bankruptcy<\/a> available to you. We’ll also discuss bankruptcy basics and whether you can file. Finally, we’ll describe the ways a bankruptcy will impact your life.<\/p>\r\n

Two Types of Personal Bankruptcy<\/h2>\r\n

The U.S. bankruptcy courts offer two types of bankruptcy to individual filers. You and your bankruptcy attorney can decide which one is right for you:<\/p>\r\n

Chapter 7 bankruptcy<\/a>: This type of bankruptcy will wipe out most of your consumer debts and liabilities in as little as three to six months. After you file, and there is no objection to your filing (by e.g., the bankruptcy trustee) the bankruptcy judge or court will grant a bankruptcy discharge of much of your secured and unsecured debt. In a Chapter 7 bankruptcy case, you may lose some of your personal property or risk liquidation of some of your assets.<\/p>\r\n

Chapter 13 bankruptcy<\/a> – This type of filing involves a repayment plan through which you pay back a portion of your debts over time. Your monthly payments will depend on your income. You’ll pay off as many debts as possible over three to five years. Once you complete your repayment plan, the court will discharge your other dischargeable obligations.<\/p>\r\n

The bankruptcy process<\/a> takes time and dedication. Both Chapter 7 and Chapter 13 will affect your credit report, credit score, interest rates, and lifestyle. The type of petition you file will heavily depend on your specific financial situation.<\/p>\r\n

Consider the points below before filing for bankruptcy<\/a> and choosing which Chapter is right for you.<\/p>\r\n

Am I Eligible for Bankruptcy?<\/h2>\r\n

Only some people are eligible for bankruptcy. You may make too much money. Some petitioners don’t owe enough money to file a Chapter 7 or Chapter 13 bankruptcy case.<\/p>\r\n

According to the Bankruptcy Code, you must meet specific requirements <\/a>to file for each type of bankruptcy. Some of these requirements<\/a> are as follows:<\/p>\r\n