If you are struggling to cope with a never ending mountain of debt then you may be wondering where you can turn. With constant creditor calls to deal with, as well as threatening letters and constant demands for payment that you just don’t have; life can often seem to be a very lonely and miserable place to be.
There are options out there, but sometimes the only option available to you is bankruptcy. As frightening as it sounds, bankruptcy may be able to help you to clear your debt and start again with no financial worries.
Bankruptcy Debt – What you should know
Clearing your debt through bankruptcy is not the easiest decision to make. It should only ever be used as a last resort due to its effects on your credit report and your future chances of gaining any type of credit. However, under some circumstances it can be the best option; particularly if your income will not support any form of repayment to your creditors.
If you can afford to make a repayment plan for any sum with your creditors then you should opt to do that first. Contact your creditors and see if they will accept a payment plan. They will ask you to send them a financial statement showing your earnings each month and your outgoings. From there they will help you to come up with a suitable payment plan. However, not all creditors are understanding and if this is the case then bankruptcy may be your only option.
If bankruptcy is your only way out then there are various things that you should know. The first is that certain debts are not eliminated through bankruptcy. These include council tax debts, some student debts and any secured loan on your home. If you have fallen behind on mortgage repayments then declaring yourself bankrupt will not keep your home safe; you will still lose it.
When you are declared bankrupt most debts will be wiped out. However that is only if you are declared bankrupt under Chapter 7. You will be allowed to keep basic assets that you will need in order to start a new life. However, all other assets will be sold off to pay some of the debt that you owed. If you are declared bankrupt under Chapter 13 then a repayment plan will be decided on by the court and you will have to continuously pay off your debts each month.
Overall if you could afford to pay back a minimum monthly sum to each of your creditor’s then filing for Chapter 13 bankruptcy would be the best idea. If on the other hand you feel that you cannot afford anything each month then you should apply for Chapter 7 bankruptcy. No matter which option you choose, the court will decide whether you can or cannot afford to repay the debts that you owe. Bankruptcy can be the best way to solve your debt worries under some circumstances, but if possible it should always be a last resort.
