Many people live with significant amounts of debt and struggle to make ends meet. People who have a difficult time paying down their debt often have a hard time paying for everyday expenses. The situation only gets worse when debt collectors start calling, trying to pressure them into paying their debt.
People drowning in debt often feel at a loss for what to do. Individuals should be aware of the benefits of filing for personal bankruptcy in Texas. Bankruptcy can help individuals have a fresh financial start by discharging certain debts. This means they will no longer be responsible for paying off that debt if it is discharged in the bankruptcy.
Filing for bankruptcy can be a complex process. However, individuals thinking about bankruptcy can benefit from understanding the basics about the three different types of bankruptcy that may help them. More information about the three types of bankruptcy options are listed below:
- Chapter 7 bankruptcy: this is the most common form of personal bankruptcy. Unsecured debts, like credit card debt, are typically discharged in Chapter 7 bankruptcy. Secured debts, like a home, are often used to repay the creditor. This often results in losing the secure assets listed in the bankruptcy but it is not always the case.
- Chapter 13 bankruptcy: this form of personal bankruptcy sets up a repayment plan to help debtors repay their creditors. During the repayment period, assets cannot be reposed, including a debtor's home. Individuals have to earn a sufficient income to qualify for this type of bankruptcy.
- Chapter 11 bankruptcy: most businesses use this form of bankruptcy. Consumers may be able to file this type of bankruptcy is their debt is higher than allowable under Chapter 13. This form allows debtors to reorganize and repay their debts.
Individuals struggling with debt and thinking about filing for bankruptcy should read our article on how to choose the right bankruptcy option to understand the differences between the three types and which option fits them best.