What Exactly Is Bankruptcy, Anyway?


If you’re struggling with meeting your household expenses and paying off your debts at the same time, you may have been advised to explore the process of filing for bankruptcy. Bankruptcy is a debt relief option whereby your debts are either reorganized so that they become more manageable, or they are eliminated altogether. This, of course, is a generalized statement used to explain a complex and intricate process. It is important to speak with an attorney, like a chapter 7 bankruptcy lawyer in Bloomington, IL, about the ins and outs of filing for bankruptcy if you’re thinking about taking advantage of the fresh start that bankruptcy can provide.

An attorney can explain how the bankruptcy process would work with your specific financial situation. As you prepare for a risk-free consultation with a knowledgeable attorney, consider some of the basics of the bankruptcy process that tend to apply to all filers. Write down any questions you may have as you read this information so that you can discuss them during your consultation.

The Basics of Filing for Bankruptcy
For most Americans who don’t own a business, the bankruptcy process is either approached through Chapter 7 or Chapter 13 of the Bankruptcy Code. Chapter 7 bankruptcy is available to low-income filers and results in the elimination of eligible debt in as little as 90 days. This process is only available to those low-income filers who can’t be expected to pay back their creditors now or in the foreseeable future.

In contrast, Chapter 13 bankruptcy reorganizes debt to make it more manageable. Debtors are then required to pay back their creditors according to the terms of their repayment plan for 3-5 years. Once the terms of the plan are met, the remaining eligible debt is eliminated. While the bankruptcy process does cause an applicant’s credit score to temporarily drop, the benefits of working with an attorney to ensure that debt is managed tends to allow people who file to greatly improve their credit scores over time. Continuing to struggle with unmanageable debt generally does more damage to credit scores in the long-term.

Legal Assistance Is Available

If you’re interested in exploring bankruptcy as a possible debt relief solution to your overwhelming debt, schedule a consultation with an experienced legal team today. Once they learn about your unique financial circumstances, they can advise you of the bankruptcy options that are available to you, or any bankruptcy alternatives that may benefit you and your family. 

It’s important to note that since the Great Recession of 2008, the stigma that was once attached to the process of filing for bankruptcy has disappeared. When the economy crashed, Americans learned that even the most hard-working and responsible individuals are generally one major financial event away from struggling with overwhelming debt. There is no longer any reason to refrain from exploring bankruptcy as a debt relief option.

Please schedule a risk-free consultation today so that an attorney can help you determine whether filing for bankruptcy may be a beneficial path forward for you and your family. Thanks to Pioletti Pioletti & Nichols for their insight into what bankruptcy is and how it might help someone who is struggling to pay off debt.