If you are coming to this section, it means all the information in the previous sections, as well as reading through the money saving ideas on the site, has failed to resolve your debt problem. If you still can’t come up with a plan to pay off your debt, your final option may be bankruptcy. It should be an absolute last resort and something to be avoided if at all possible. First and foremost, bankruptcy in itself can be quite expensive. You will need to pay lawyer, court and filing fees upfront. The entire process can take months and you will have to endure exhaustive questioning from creditors. Your finances will become exposed to the public and the bankruptcy will remain on your credit record for 10 years meaning that obtaining credit at affordable rates in the future will be extremely difficult. Sometimes, however, certain circumstances dictate it as the only option. There are two possible forms of bankruptcy that may be applicable if you have reached this state.

Chapter 7 Bankruptcy is a straight forward bankruptcy that eliminates most debts and relieves you of your responsibility of paying most creditors. There are, however, some debts that you are still required to pay even when filing chapter 7 bankruptcy. These include taxes, child support, alimony, student loans, legal judgments against you, money you obtained through false financial statements and loans not listed in the bankruptcy filing. While the court may force you to surrender property you own in order to help satisfy the debt, you are usually able to keep your home, car, tools used in your job and personal property.

In Chapter 13 Bankruptcy, unlike chapter 7 bankruptcy where your debts are relieved, you are required to pay back all or part of your debt. You surrender control of your finances to the bankruptcy court which will approve a repayment plan based on your financial resources. The plan will lasts from 3 to 5 years. During the period of repayment, The chapter 13 bankruptcy plan provides that you do not have to pay interest charges on the debt during the repayment period and your creditors can not harass you for repayment during that period.

If you find that one of these bankruptcy options is the only one for you, then rereading this article will be of even more importance. It will let you take a preemptive measure to get your personal finances in order so something like this never has to happen again.

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