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What Bankruptcy Wipes Out Debt?

What Bankruptcy Wipes Out Debt?

If you are drowning in debt and considering bankruptcy, you may be wondering which form helps you eliminate debts. When many people think of going through this financial legal process, they think about completely wiping out debts. This is sometimes the case, but not always.

When it comes to filing for bankruptcy, individuals have the choice between Chapter  7 and Chapter 13.  If wiping out your debt is a priority for you, consider this information while thinking about questions to ask your Rockville bankruptcy lawyer during an upcoming consultation.

Chapter 7 Wipes Out Debts, Sometimes With a Cost

As long as your income qualifies, Chapter 7 can be a solid choice for wiping out debts. With that said, it can also come at a cost, depending on your assets. For example, if the value of your assets is too high, you may have to give up certain possessions as part of your discharge.

Chapter 13 Can Wipe Out Debt After Years

With Chapter 13, wiping out debt works differently. Instead of immediately eliminating debts and possibly giving up some assets, debtors and credits work out an agreement to repays debts over a three-year or five-year plan. After you pay all your debts according to the Chapter 13 agreement, you will be debt-free.

Bankruptcy Offers Financial Opportunity

A large portion of your bankruptcy experience depends on the way you look at it. Even though wiping out debt can be more difficult than some people initially hope for, it can nonetheless offer a financial opportunity that no other route may. Sometimes, overcoming financial challenges take time, patience and additional sacrifice, but there is hope ahead.

At the end of the day, both chapters of bankruptcy can wipe out your debt, but you may face giving up some assets or having to wait several years. Either way, bankruptcy may offer you a better financial future than your current debt load.