Struggling with debt can leave your entire family in a difficult position. In addition to the stress you may feel as a result of being behind on your bills, you may also experience constant contact from debt collectors and creditors who are trying to collect payment. When you can no longer manage your bills on your own, you may wonder if there will ever be a way out for you. One option you have is to seek the protection of consumer bankruptcy.
There are many misconceptions about bankruptcy. You may be reluctant to file because of misconceptions you may have about this process, but this option could represent the opportunity for you to seek a better financial future. If you decide to move forward with bankruptcy, one of the first and most important decisions you will make is identifying the most appropriate chapter for your individual situation.
Chapter 7 versus Chapter 13
Bankruptcy is the process of eliminating different types of debt through repayment or discharge. The two most common chapters of consumer bankruptcy are Chapter 7 and Chapter 13. The ideal chapter for you depends on the type of debt you owe, your income and other factors. Facts about Chapter 7 include:
- This is liquidation bankruptcy. You may have to relinquish some of your assets, but exemptions are available.
- Chapter 7 takes only a few months to complete, and at the end, eligible remaining balances will be eligible for discharge.
- Chapter 7 is not an option for those who earn over a certain amount of money.
Chapter 7 is a popular option because it takes a shorter amount of time to complete. However, it may not be an option for you. If it is not, you could be eligible for Chapter 13 bankruptcy. Important facts about this process include:
- Chapter 13 bankruptcy typically takes a period of three to five years to complete.
- Chapter 13 bankruptcy reorganizes an applicant’s debt, and he or she will make payments according to the bankruptcy plan.
- This is often an ideal option for individuals who have a large amount of secured debt.
When you apply, you will submit to a means test that will determine, based on your income, assets and liabilities, whether you are eligible for Chapter 7 bankruptcy or if you should file for Chapter 13.
Your best financial future
If you are struggling with debt, you may benefit from considering how bankruptcy could provide you with the opportunity for a better financial future in Maryland. An assessment of your case can help you determine whether you should move forward with this and what legal options you have available to you.