If I Declare Bankruptcy, Will That Clear All My Debts?

Sometimes drastic measures, such as bankruptcy, must be taken. Two types of bankruptcy exist, Chapter 7 and Chapter 13. Get legal help to decide which to use. Timing is important.

Everyone want to avoid being in debt. However, things happen, by choice or by chance, and everybody is indebted at times during their lives. Unfortunately, especially in these recessionary times, debt can get out of control. Your home phone is constantly ringing with collectors on the other end. Maybe your boss is complaining about phone calls the collectors make to him. Maybe you are in danger of going into default on some loans or the late fees are piling up.

Once you are at this set circumstances, you may be thinking about declaring bankruptcy to get rid of this nightmare. However, you are hesitant because of all the horror stories you have heard. You hear about people losing all their property, their homes, and any money they may make in the future. The most confusion seems to circle around whether all of your debt will be cleared away.

There are a couple of ways to approach the problem and timing is key. Your first step should be to consult a bankruptcy counselor, usually a lawyer. Their professional knowledge and experience will be put to use to your advantage. The will help you understand why timing is important. They will guide you so that you remove as much debt as is legally possible.

Bankruptcy Chapter 7 and Bankruptcy Chapter 13

There are two types of bankruptcy offered to consumers overwhelmed by uncontrollable debt. Chapter is a total liquidation of you every debt that you have current at the time of the bankruptcy declaration. It also calls for the complete liquidation of all valuable property you may own. The sale of this property will go to satisfy as much of the debt as it will cover. You are starting all over.

Chapter 13 is a way for you to repay your debt in a controlled manner and you do not have to forfeit any property. The debt is paid over time, usually via wage garnishment. But collectors can no longer hound you as they will be paid in time under the direction of the bankruptcy court.

Bankruptcy and Timing

Timing is important when it comes to bankruptcy for some obvious reasons that still are often overlooked. If you are facing a foreclosure of your home or other property, you need to start the bankruptcy process well before you lose it. However, if there is not imminent danger of losing real property, you may want to delay the bankruptcy if a large bill is about to come due. For instance, if you have a huge medical bill for a hospital stay or expensive treatments, you will want to wait so that the bill is wiped clear when the process is finished.

Another timing aspect has to do with getting help. Do not procrastinate on getting a counselor or lawyer to start the process. When they asses your financial circumstance, they will be able to help you time the procedure to cover all possible debt. The sooner you seek help, the sooner the situation can be brought under control. If your debt has become impossible for you to control, get help immediately.

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