3 Questions About How Bankruptcy Can Give You A Financial Fresh Start

Do you have debt that is unwanted that you cannot pay for, such as unsecured loans, medical debt, and credit card debt? It is possible to make this debt go away by using bankruptcy, which discharges that debt that you are unable to pay. Here is what you need to know about using bankruptcy to get that fresh start to your finances that you are looking for.

How Do You Qualify For Bankruptcy? 

Know that everyone is not going to qualify for bankruptcy because there is a qualification process that you must go through. This process involved looking at how much money you make, your existing debts, and how much you must pay toward those debts per month. Since everyone's financial situation is different, it is worth meeting with a bankruptcy lawyer to determine if you qualify for bankruptcy based on your local bankruptcy laws. This will help ensure that you know what your options are and do not make incorrect assumptions. 

Can You Keep Your Home And Vehicle?

The main things that people are interested in keeping during bankruptcy are your home and your vehicle, since you may have paid significant equity into these two assets and the items are not fully paid off. Know that you do not have to discharge these debts in bankruptcy if you do not want to. You can selectively decide to discharge the unsecured debts while maintaining those high-value assets. 

Do You Have To Repay Any Of The Discharged Debts?

There are multiple forms of bankruptcy, and each of them has its own way that the debts are discharged. Under Chapter 7 bankruptcy, many of your assets are liquidated to pay off as much as possible to your creditors. There are exemptions for your vehicle and home, but it often involves liquidating assets when possible to pay them back as much as possible. 

A Chapter 13 bankruptcy involves a repayment plan where you gradually pay back a portion of your debts over time so that they can be discharged. Your creditors may end up getting more of the money that they are owed with this method, and the bankruptcy filing will have less of an impact on your credit report. You'll be able to recover from it much faster because you are paying back more of your debts. 

Reach out to a bankruptcy lawyer for more information about discharging your unwanted debts.