5 Things You Should Know About Filing For Bankruptcy

If you're facing serious financial hardship, you may be wondering what your options are. When you owe more money than you can feasibly pay back and feel like you're drowning in debt, filing for bankruptcy can be a sensible choice. Specifically, bankruptcy is a legal process that allows you to sell off your assets, repay your debtors, and possibly even discharge some of your debts so you can get back on your feet financially.

Not sure whether bankruptcy is right for you? There are a few things you should know about bankruptcy before you make a decision.

You Have Bankruptcy Options to Choose From

Start by understanding that there are different types of bankruptcy available, with Chapter 7 and Chapter 13 being among the most common. With a Chapter 7 bankruptcy, you're able to liquidate your assets in order to repay your debts as much as possible. Chapter 13 bankruptcy, on the other hand, allows you to retain your assets (such as your home and your car) while working out a court-mandated payment plan with your debtors. 

You Might Not Have to File With Your Spouse

If you're married, you don't necessarily have to file bankruptcy jointly. There are circumstances where filing jointly may make the most sense (such as when the majority of your debts are shared). However, if one person carries significantly more debt than his or her spouse, it may be best for only one person to file. This can protect the credit score of the spouse who does not file while still helping the other spouse find relief from crippling debt.

You Can File More for Bankruptcy More Than Once

Many people assume that you only have one opportunity to file for bankruptcy. In reality, you can file for Chapter 7 bankruptcy once every eight years, and Chapter 13 bankruptcy can be filed once every six years.

It Is Possible to Rebuild Your Credit After Filing

Your credit will be impacted after you successfully file for bankruptcy. However, a bankruptcy only stays on your credit report for 10 years, and there is no reason you cannot gradually rebuild your credit score with responsible spending during this time.

A Bankruptcy Lawyer Can Make Things Easier

If you're thinking about filing for bankruptcy, the best thing you can do is to first consult with an experienced bankruptcy attorney. He or she can provide you with valuable guidance and representation through the entire process.