How Bankruptcy Can Help You Regain Your Financial Freedom

Being in debt can create several problems such as damaging your credit score and making it difficult to save money. In this type of situation, you need to consider filing for bankruptcy. By looking into this option, you can get a better understanding of how it can help you regain your financial freedom.

Possible Discharge of Debt

Each type of bankruptcy has its own benefits. Chapter 7 for example, allows you to discharge acceptable debt from different sources. These sources are generally credit card companies, hospitals, personal bank loans, mortgage companies and car loan banks.

By choosing to file for Chapter 7, you have the possibility of discharging or erasing the amount of money you owe these companies. The court takes into account your monthly income versus your accumulated debt.

In many states, you need to pass a means test. To pass this test, your income needs to be below the state average for a family of equal size. Since each state is different and the ratios can change, you will have to consult a bankruptcy lawyer.

The lawyer will have the current ratios and will be able to evaluate your situation. If you fall within the acceptable range for the state, the lawyer can help you determine if filing for Chapter 7 bankruptcy is the right choice for situation.

Repayment Option

In some cases, discharging a debt is not the right course of action. One example is when you want to keep your home, which means a repayment plan is a better choice. During this type of financial situation, filing a Chapter 13 bankruptcy is a good option.

A Chapter 13 bankruptcy allows you to create a repayment plan through the court system. A lawyer (such as Curtis A. Anderson, Attorney At Law) can negotiate different terms as well such as lowering the overall repayment amount and reducing or eliminating interest rates on your loans.

A judge will look over the agreement and determine if the repayment plan is appropriate. In many cases, the judge will agree to the terms, but you need to make sure that each month the payments are made to avoid any further issues.

Regain Financial Stability

After filing for bankruptcy, you have the opportunity to regain your financial stability. You can take this time to start saving money for the future.

 It will take time and a precise budget to accomplish your goal. However, by being patient and sticking to your budget, you can regain control over your finances and eliminate most of your debt in the process.