What is bankruptcy?
Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as "liquidation" (Chapter 7) or "reorganization" (Chapter 13).
What is the purpose of bankruptcy?
The primary purpose of bankruptcy is: (1) to give an honest debtor a "fresh start" in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has the means available for payment.
Questions to Consider Before Filing for Bankruptcy
How do you decide if bankruptcy is right for you? Here are some tips on what you should think about before you file for bankruptcy:
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1) Have you spoken to a financial advisor or credit counselor? Seek information before making your decision to file for bankruptcy. Speak with a professional and make sure bankruptcy is your best option. There are many alternatives to bankruptcy that may work for you.
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2) Have you considered the long term consequences? Bankruptcy can destroy your credit and linger for up to seven years.
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3) Have you considered all of your options? There are a number of different strategies for handling debt other than bankruptcy. Click here to learn more about alternatives to bankruptcy.
