If you are at a place in your life when you are researching bankruptcy, wading through information about whether you qualify for the process and how to start it can be overwhelming. As you think about your options, answering one critical question can help you make your decision. Do you have any assets you want to keep?
Because there are two types of bankruptcy filings available to individuals, if you own assets you do not want to lose, you will have to choose whether to file Chapter 7 or Chapter 13.
Chapter 7 bankruptcy
Chapter 7 is the most common form of bankruptcy. During this court-supervised process, a trustee identifies which of your assets to liquidate. The trustee then recommends to the bankruptcy court how you will pay your debtors off, either in full or part.
Chapter 13 bankruptcy
Chapter 13 is an option if you have a steady income and want to hold on to a significant asset, such as a house. In this situation, you work with a trustee to develop a three- to five-year repayment plan to pay off most of your debts. You can also get some debt discharged at the end of this time frame if you met the terms of the court-approved plan.
Answering these two questions can help clarify what your next steps should be. If you answer these and decide that filing for bankruptcy is still an option you want to consider, you should make a complete list of all of your debts and assets before beginning the bankruptcy process.