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Can bankruptcy give you a fresh start?

To many, filing for bankruptcy can feel like the end of the world. It means admitting, or being forced to admit, that you are financially unable to pay off your debt. However, many do not realize that bankruptcy can act as a fresh start by wiping the slate clean.

This it is not as uncommon as you may think. Many who are overwhelmed by debt look at bankruptcy as a way to rebuild. Chapter 7 and chapter 13 both provide good options for those who qualify. In 2017, over 765,000 individuals filed for bankruptcy.

How can bankruptcy benefit you?

Chapter 7 bankruptcy “liquidates” your assets to pay your creditors to help you find relief. This process can take four to six months, but after it is complete many individuals find themselves debt free. This lack of debt can make it easier to start fresh. In order to qualify for this type of bankruptcy, you must have low enough income, determined by the means test.

If you have too high of an income to qualify for chapter 7 bankruptcy, you may find relief in chapter 13. Unlike chapter 7, chapter 13 does not completely wipe out all of your debt. Instead, this type of bankruptcy works to help you reorganize and rebuild by setting up a payment plan lasting three to five years. At the end of this period, if you are still in debt, you may be able to have them discharged.

Debt that bankruptcy cannot discharge

While there are many debts that bankruptcy can wipe away or help you pay off, such as credit card debt or medical bills, there are debts that are not dischargeable. They include:

  • Child support
  • Fees from crimes you have committed
  • Some tax debt

Many people frown upon filing for bankruptcy, but that does not mean it is a bad option. Bankruptcy can be a great option for those who are overcome by their debt and looking for a way to start fresh.

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Sigmon & Henderson, PLLC
518 S New Hope Road
Gastonia, NC 28054

Phone: 704-269-6374
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