Personal bankruptcy options can help struggling consumers with medical debt, credit card debt and other types of debt. There are different types of personal bankruptcy that struggling consumers should be familiar with that can help them in different situations.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is one type of personal bankruptcy that can provide debt relief for struggling consumers. Chapter 7 bankruptcy is considered a liquidation bankruptcy which allows the filing party to liquidate non-exempt assets to repay creditors and enjoy debt relief. Exempted assets may be protected from the process so anyone considering filing for Chapter 7 bankruptcy should be familiar with what those bankruptcy exemptions are.
Chapter 13 bankruptcy
Chapter 13 bankruptcy is another type of personal bankruptcy that can provide debt to relief for struggling consumers. Chapter 13 bankruptcy is considered a reorganization bankruptcy option that allows the filing party to reorganize their debt into a manageable repayment plan. The repayment plan can usually be repaid over a 3 to 5-year period. The repayment plan is developed with the help of the bankruptcy court. Once it is complete, and has been fully complied with, the filing party will enjoy a debt discharge and debt relief.
Which one is better for you?
There are different tests used to determine eligibility for the different types of personal bankruptcy options and in some cases, a filing party may be able to change from one type to the other. Struggling with debt and financial difficulties can be stressful and overwhelming which is why any consumer facing bankruptcy should be familiar with the different personal bankruptcy relief so they can decide which is best for them.