The calls never stop, and the bills keep coming. You never know how you are going to get through to the next paycheck. Does this sound familiar?
It's far too common for good people from all walks of life to be in debt that they can't manage. Sometimes they just need to sit down away from the noise and prioritize. Other times, however, the situation is more severe and calls for a fresh start. Here is a guide to understanding when relief in the form of bankruptcy may be the best call to make.
Two different types
If you feel you need relief it's important to know what is available to you. There are two kinds of bankruptcy protection available.
Chapter 13 bankruptcy is commonly known as consolidation or reorganization. In this, your debt may be partially reduced through negotiations but it is certainly going to be put into one payment. A plan to pay off the remaining debt is developed over a three to five year period of time. This is a complex arrangement which is definitely going to require an attorney's assistance.
Chapter 7 bankruptcy is called liquidation. If you make very little money and do not have a lot of property this may be an option for you. In this, your debts can be completely cleared away in as little as four months, depending on how complicated your arrangements are.
Can I keep my stuff?
Generally speaking, any debts associated with your house or your car are a part of a Chapter 13 reorganization. In a Chapter 7, such debts have to be "reaffirmed" or taken on once the process is cleared. Other day to day items are not usually included.
You won't be forced to have a big garage sale or anything like that as part of the bankruptcy process. But larger items such as retirement accounts and anything of value will have to be negotiated.
Seeking relief
If you are in debt over your head, what you need is relief. That may or may not involve the legal process of filing for bankruptcy. Sometimes, it's a matter of negotiating your debt down with your creditors.
You have to keep your eyes on that prize more than anything. There are many ways to bring back peace of mind and put a stop to all the calls if you have too much debt. Seek help in the form of a consultation right away and be sure that you are taking care of business. You will be glad once you get the process started, no matter which way you wind up going.