2021 has arrived. If you’ve been looking at your finances with despair, it may be time to start making a plan for tackling your debt and overcoming the challenges you’ve been dealing with.
2020 was a tough year for many people in America. Job losses were extensive, and many people found themselves living on tighter budgets. Some maxed out their credit cards to make ends meet. Even if you’ve been able to find a job and get back to a normal schedule, paying back those debts can be difficult. If you’re overwhelmed, missing payments and struggling to afford to live, it’s time to consider bankruptcy.
How can bankruptcy help with your debt?
There are two primary kinds of consumer bankruptcy, Chapter 7 and Chapter 13. Chapter 7 is called liquidation bankruptcy because assets not exempted can be sold to repay creditors. Chapter 13 bankruptcy is more like a payment plan. It takes three to five years, and remaining qualified debts are discharged if you make all of those payments on time.
The good news about bankruptcy is that it can stop creditor harassment and calls. You can get back into a position where you’re focused on earning and paying your bills, rather than being stressed about not having enough.
Will bankruptcy have a negative effect on your credit?
Yes, bankruptcy will likely impact your credit. How much is dependent on your current credit score and how far behind you are on your bills. Quite often, by the time someone contemplates bankruptcy, their credit score is already deeply damaged. Bankruptcy actually makes it possible to rebuild your credit.
If you’re thinking about bankruptcy, your attorney can go over the pros and cons with you before you decide to file for bankruptcy.