Filing for bankruptcy is never an easy choice.
But sometimes, it can feel like the only way to escape the vice grip of debt and move on with life.
Most personal bankruptcy filers will turn to a Chapter 7 bankruptcy, which offers almost total debt forgiveness and a quick discharge time.
But before you can get a fresh start from a Chapter 7 bankruptcy, you should know the basics — and what to expect from the bankruptcy process.
What Is Chapter 7 Bankruptcy?
In researching your options, you’ll find there are two common types of bankruptcy for individuals and couples: Chapter 7 and Chapter 13. While similar in many ways, they differ in some big areas.
Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” is a bankruptcy by which individuals or couples who are deemed to not have a high enough income to pay back debts can absolve themselves through liquidating their assets. You can include both secured debts and unsecured debts.
If the liquidation doesn’t cover the entire debt, then the remaining balance is typically forgiven.
Chapter 13 bankruptcy, also known as “wage-earner bankruptcy,” is for those whose income or other qualifiers make them ineligible