Cleaning Up My Finances

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Cleaning Up My Finances

About six months ago, I could tell that I needed help. It seemed like no matter how hard I tried, I couldn't get my finances in order. I was spending way more than I earned each and every month, and it was absolutely devastating to my pocketbook. One day, I realized that all of my credit cards were maxed out, and that I was past due on my rent. I knew that I was going to get kicked out of my apartment for not paying, and so I started exploring the possibility of borrowing money from a lender. Long story short, my credit was in terrible condition, and I ended up declaring bankruptcy to make things right. Check out this blog to learn more about cleaning up your finances.


2 Types Of Bankruptcy Filings To Consider

When considering a bankruptcy, filing it can be extremely tricky and confusing, mostly because there are multiple types of bankruptcy filings that each offer their own sets of benefits and downsides. Thankfully, a bankruptcy attorney can help you determine which option is best for you, with chapter 7 and 13 bankruptcies being the most common. 

Chapter 7

One of the most attractive bankruptcy filings for many people is a chapter 7 filing. The main reason for this is that a chapter 7 filing is able to help you discharge the vast majority of debts that you may have. This means that you will not have to pay any of the chapter 7 eligible debts back at all, which makes this a fantastic option if you are unemployed or simply want to start over with a clean financial slate.

The main downside to this type of filing is that it is unable to completely erase your debts as there are a few exempt types of debt. For example, you cannot discharge tax, child support, alimony, legal judgement, and student loan debts with a chapter 7 filing.

Another downside to a chapter 7 is that you will need to be prepared to surrender at least some of your property. In most cases, a chapter 7 filing will require you to surrender any items that you are still financing, such as a vehicle.

In addition, the bankruptcy court may also order you to surrender cash, investments, vehicles, and other property in order to provide some compensation to your creditors. Now, this may sound a bit harsh, but surrendering that property is often a small price to pay to potentially end up completely free of debt.

Chapter 13

A chapter 13 filing is one of the best options available for you if you still have some type of income coming into your household. The income is needed for a chapter 13 filing as your debts will not be discharged in this type of bankruptcy case; the payment terms will simply be adjusted.

In a chapter 13 filing, your monthly payments will be consolidated into a single payment that you pay to the bankruptcy court rather than to your creditors. The court then uses that money to pay back your creditors.

The reason that you will want to consider this approach is that the total amount of debt that you must repay will actually decrease so that you can finish the bankruptcy court's payment plan in just a few years. Another benefit to this approach is that you are often allowed to keep all of your property as your creditors will still be getting paid.

Speak to an attorney, such as Curtis H. Hatfield Attorney At Law, today in order to discuss your bankruptcy filing options. A chapter 7 is perfect for people with little to no income and who want to try to start over financially, while a chapter 13 is ideal for people who want to be able to pay back their debts in a short amount of time and keep their personal property.