Can You Get Your Debts Expunged Through Bankruptcy?

Millions of debt stricken consumers are resorting to bankruptcy in the post recession U.S economy. The debtors are forced to file for bankruptcy protection as the consumer debt is skyrocketing. The increasing unemployment and challenging aspect of job loss is causing an avalanche of people to file for bankruptcy.

If you are in a similar situation and contemplating filing for bankruptcy, then give it a second thought. Bankruptcy stigma ruins your credit report for 7 to 10 years. Therefore, consumers look for an alternative like a debt consolidation or settlement program. But if you are intending to discharge your debts through bankruptcy then this article can help you to get a vivid knowledge on personal bankruptcy.

Types of personal bankruptcy

The debt laden consumers often opt for chapter 7 and 13 bankruptcy to discharge their debts. Chapter 7 bankruptcy is also known as liquidation bankruptcy where the court appointed trustee sells the assets of the filer. The fund raised from the sale is disbursed among the creditors. But chapter 13 restructures your debt in to a single monthly payment. This repayment plan will continue for 3 to 5 years and the remaining debts will be forgiven. The trustee of chapter 13 bankruptcy will make the repayment plan reasonable for you to pay off.   

Know about the advantages of filing bankruptcy

1. Bankruptcy is considered to be one of the cheapest and reliable debt reduction processes. It helps to discharge your debts much faster.

2. If you file bankruptcy, it gives you a fresh start with your finances. You can expunge your debts through bankruptcy and avoid getting sued by your creditors after the end of the bankruptcy process.

3. You can avoid the stressful process of negotiating with the creditors. This will help to avoid the difficult situation a debtor goes through while dealing with the creditors.

4. Once you declare bankruptcy then an automatic stay is placed. This prevents your property from repossession and foreclosure by the creditors. You can also avoid creditor harassment after filing bankruptcy.

Know about the disadvantages of filing bankruptcy

1. Bankruptcy will blemish your credit report and the creditors might question your creditworthiness in the future. Therefore, it will be difficult to acquire loans in the future.

2. You can lose control over your valuable assets like your house, car or jewelry if you file bankruptcy.

3. A potential employer might hesitate to hire a bankrupt. Therefore, bankruptcy can lower your chances of getting jobs.

So, bankruptcy can be the right choice for people who have overwhelming debts but cannot afford to pay back. However, before deciding to file bankruptcy you should remember the above mentioned points.