The gradual erosion of your finances has led to your family facing a significant burden. You clearly saw this coming due to steep losses in income, growing medical expenses, a now-unaffordable mortgage along with spending habits that too often were illogical.
Cornered by monstrous debt, you realize bankruptcy is the most realistic option for you to wipe free most of your debts and gain a fresh start on your finances.
Important factors related to bankruptcy
When considering bankruptcy, here are some key matters to consider:
- Chapter 7 and Chapter 13 are the typical types of personal bankruptcies. Chapter 7 is the most common form of bankruptcy. Your debts are discharged and you normally can reaffirm debts on cars and homes to retain those items. Chapter 13 involves reorganizing finances. You make monthly payments to a trustee, who then distributes those payments to creditors.
- Understand that not all debt goes away. Debt that survives bankruptcy includes child support, alimony, student loans and most taxes.
- A bankruptcy remains on a credit report for 10 years, but that does not mean you do not have credit. Most individuals can raise their credit score into a good range within several years of filing bankruptcy.
- Although prospective employers and landlords will learn of your bankruptcy through credit reports, the prior bankruptcy may not affect your credit as much as delinquent accounts would. Bankruptcy can often help improve your credit.
- To get back on track, get a secured credit card. Such a card requires you to post a deposit like $500 with a lender. Then you can charge up to $500 on the deposit. In essence, your credit limit equals the amount deposited into the account.
- In 2019, Illinois had the fifth-highest rate of personal bankruptcies among all states with 3.78 filings per 1,000 residents.
- There are a multitude of factors that go into deciding which form of bankruptcy is best for you. Talk to a lawyer to learn your options.
In many cases, bankruptcy is the obvious and most helpful solution. Liquidate assets and gain a fresh new start on finances through bankruptcy. You have come this far and already learned from some of the previous mistakes you have made.