Sometimes, we struggle with debt from many sources and it can become difficult to manage our finances. There are several options available if you are facing this situation.
Depending on your specific circumstances, you may be able to consolidate your debt or call your creditors to work out a plan. This may be an option to a formal bankruptcy proceedings. However, each case is unique and there may be situations where liquidating your debt in Bankruptcy is a viable option. Keep in mind that there are various types of Bankruptcies.
Chapter 7 can eliminate most types of unsecured debt. Unsecured debt, is a type of debt that is not tied to specific property; ie: house or a car. Most unsecured debt include things like credit cards, hospital bills, utility bills, cell phone bills, department store cards, and medical bills, etc.
The primary purpose of a Chapter 7 Bankruptcy is to have your debts discharged and give you a fresh start. The discharge relieves you from having to pay the debt.
Not everyone qualifies for a Chapter 7.
You have to meet specific requirements in order to qualify for a Chapter 7 Bankruptcy--such as the "means test."
The "means test" compares your monthly income and the amount of your debt to figure out how much you can pay your creditors. If, after the application of the "means test" it is determined that you are incapable of paying the debt, then you can proceed with a Chapter 7 Bankruptcy where your debts are discharged.
It is best to talk with an experienced attorney, learn these basic concepts, and then determine the best plan of action based on your unique situation.