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Intro to Bankruptcy During the Coronavirus Pandemic
When bills become unmanageable, such as after a divorce, illness, or job loss, bankruptcy provides a filer with a financial safety net. It works by wiping out or “discharging” qualifying debt —credit card balances, overdue utility bills, personal loans, gym memberships, and more—and giving the filer a fresh start. If you’re considering filing for bankruptcy , you’ll want to learn what each chapter can and cannot do .
Individuals often file for Chapter 7 bankruptcy because it’s quick and doesn’t require debtors to repay creditors. Higher-income earners who make too much for a Chapter 7 discharge can file for Chapter 13 bankruptcy . Although a debtor must pay back some amount through a Chapter 13 repayment plan, Chapter 13 has other benefits, like preventing a home foreclosure or car repossession and reducing the amount owed on secured debt. Both bankruptcy chapters stop harassing debt collectors and put an end to wage garnishments, creditor lawsuits, and other collection actions.
Filing for bankruptcy will affect your credit score , but it will improve with time—and often far sooner than most filers expect. In fact, many people find that filing for bankruptcy repairs credit faster than would be possible otherwise.
Bankruptcy isn’t just for individuals with consumer debt problems. Filing can benefit a small business owner by minimizing personal liability after a company closure or by helping a small business return to profitability.
Finally, no one wants to file for bankruptcy. If you need bankruptcy help but have reservations, you’re not alone. Not only have employers laid off staggering numbers of workers due to the coronavirus outbreak , but companies large and small are closing at a record pace—and many businesses will seek bankruptcy relief . But that’s not as bleak as it might seem. Each fresh start—including yours—moves the economy one step closer toward recovery.
What You Need To Know Before Filing Bankruptcy
Filing For Bankruptcy in 2022
When considering filing for bankruptcy, it can be challenging to make sense of the bankruptcy process and the available options. Our bankruptcy guide not only answers your bankruptcy questions but explains the three types of bankruptcy available, Chapter 7 bankruptcy, Chapter 13 bankruptcy, and Chapter 11 bankruptcy, so you can navigate the bankruptcy process successfully when filing for bankruptcy in 2022.
What Is Bankruptcy?
Asking yourself, "What is bankruptcy?" is common when facing financial challenges. But there are several types of bankruptcy, not just one, that help when illness, divorce, foreclosure, or job loss strikes. For bankrupt individuals, the three types of bankruptcy are Chapter 7 bankruptcy, Chapter 13 bankruptcy, and Chapter 11 bankruptcy. Each of these types of bankruptcy can give you a fresh start. Not only does this article answer the question, "What is bankruptcy," but you'll learn how bankruptcy works and the differences between the three types of bankruptcy, Chapters 7, 13, and 11 so you can choose the best type of bankruptcy for you.
Should I File for Bankruptcy?