One of the most overwhelming and frustrating aspects of owing a significant amount of debt is not knowing how you will find your way out of the situation. A significant amount of debt can impact your mental health, your future interests and your current stability, and you do not have to face this problem on your own. Through the process of bankruptcy, you may be able to find your way out of debt and create a better financial future for yourself and your loved ones.
There are two main types of bankruptcy, Chapter 7 and Chapter 13. These are common options for consumers, and the right choice for you depends on the details of your individual financial situation. It is important to know your options before you proceed, as well as to have an understanding of the options available to you.
Know your bankruptcy options
Most bankruptcy applicants choose to apply for either Chapter 7 or Chapter 13 bankruptcy. These offer different benefits, depending on factors such as the type of debt you owe and your income. While many people prefer Chapter 7, not everyone qualifies. If you are not eligible for Chapter 7, Chapter 13 could be an option. Note the differences between the two most common bankruptcy options:
- Chapter 7 — This is liquidation bankruptcy, and it is the preferred choice for those who owe a significant amount of unsecured debt, such as medical bills or credit card bills. Chapter 7 typically takes only a few months to complete, and applicants can keep most of their personal property.
- Chapter 13 — This type of bankruptcy reorganizes balances into one sum that is manageable. The applicant will make payments each month and can take a few years to complete Chapter 13. It is ideal for applicants with a significant amount of secured debt.
If you are considering bankruptcy, you will benefit from considering all of the options available to you. An assessment of your debt, your goals for the future and other details will allow you to face the future with confidence and determine if Chapter 7 or Chapter 13 is right for you. It may be helpful for you to work with an experienced legal ally in order to move forward with the best possible decision for you and your Maryland family.