Some people know a Chapter 13 as the "wage-earner's bankruptcy." This is because it is reserved for individuals who can afford to make regular payments to the bankruptcy trustee. The money goes toward paying off creditors, and the payments continue for three to five years.
The thought of having to file for bankruptcy doesn't set well with some adults because they take pride in paying their bills. The thing to remember is that bankruptcy is a tool that enables you to take control of your finances when circumstances spiral out of control. This is typically a better idea than having to string creditors along with promises of payments that might not come or that might be less than you promised.
Most people hope they never have to experience filing for bankruptcy. In the past, there was a stigma associated with filing for bankruptcy protection. Now that the stigma is largely gone, many people don't dread it quite as much.
People who file for Chapter 13 bankruptcy will have to watch their spending throughout the course of the bankruptcy. This is because you will have to make payments to the bankruptcy court in an effort to pay off your debts. There won't be much money left once this is done, so you will need to determine what you can do to cut expenses.
Paying bills isn't anyone's favorite activity but it is a necessity of life. Some people are even more upset about having to do this each month. These are the people who have more bills than they have money. They are the ones who have high credit card balances, medical bills and other similar debts.
Having to file bankruptcy will impact various areas of your life, including your credit score. If you are considering filing a Chapter 7 or a Chapter 13, you need to know how yours might be affected. All of these impacts could have a negative pull on your life for a while.
Student loans are the second highest debt category for consumers. Only mortgages surpass this. However, student loans usually can't be discharged in bankruptcy. The reason for this is that a person has to pass the Brunner test if they are going to have the student loans forgiven through bankruptcy.
Medical bills can be quite costly and can lead to very serious financial issues. Even if you have wonderful insurance, some items that aren't covered might lead to troubles. If you are in this position, there is only so much else you can cut back on so that you can pay the medical bills. Once you have cut things down and don't have anything left that will help you to save money, you might have to look at other options.
Realizing that you have more debt than you can handle is a frightening event. There are two things that you can do. One of these is that you can ignore it and hope that it all goes away. The second is that you can work to have the debts taken care of. If you choose the more responsible option, trying to take care of the debt, you might choose to look into the option of filing for bankruptcy.
Some people don't want to file for bankruptcy because they see it as a failure. They think that they are shirking their duty to pay off the debts they owe and that it will have a negative impact on the economy. This isn't the case.