Having decided to file for bankruptcy, you are confronted now with two choices – filing for total bankruptcy or liquidation under Chapter 7 or filing under Chapter 13. With some information about chapter 13, you can make an informed decision. Here is all you wanted to know about chapter 13 Bankruptcy.

Chapter 13 Bankruptcy is favored by people with assets they want to save and who are willing for a partial or full repayment of debts over a period of time. When you file for bankruptcy under chapter 13, it shows on your credit report for 7 years unlike chapter 7 that continues to show for 10 years. Depending on the extent of your debt and your income, under chapter 13, you might have the opportunity of retaining your property like home or car that has been mortgaged. You will also be given a time frame varying from three to five years to pay back your debts.

Chapter 13 bankruptcy filing may have a less negative impact, as it shows that you are willing to keep your debt obligations. When filling up forms for bankruptcy, you will need information regarding list of all your creditors and the details of the credit plan for each, your income details, your property details and your monthly living expenses details. However, bankruptcy should be considered only as a last resort because it lowers your credit worthiness to a large extent.

Is debt consolidation better than bankruptcy? You should ideally decide one way or the other based on what each entails and what your current and future financial position is.

Bankruptcy means declaring that you will not be able to meet any of your debt obligations and giving away control of all your assets to trustees, who will eventually auction your assets to settle claims. It also means your credit report will show your
bankruptcy status and there will be a drastic drop in your credit rating. This potentially translates into your being unable to get any loans in the conceivable future.

Debt consolidation means getting one big loan and paying off all your other pending loans. It is an option to consider when you want to keep your credit rating intact and if you have an asset like a home against which you can take out a home equity loan or when you know that in the near future, your finances are going to improve, like perhaps a huge anticipated bonus at work.

A debt consolidation loan also reduces your monthly outflow towards debt repayment as it has longer repayment periods. It is best to consider your long term plans and the impact of bankruptcy and debt consolidation on your future, before making a decision between debt consolidation and bankruptcy.

After Bankruptcy Credit Cards - Recover from Bankruptcy with a Credit Card

Bankruptcy – the word signifies a black mark on an individual’s financial status. It means that he was unable to meet/work off his debt obligations. It indicates that his credit rating will plummet, from which he may never be able to recover. So, you may have to understand that bankruptcy is a last resort. When there are myriad tips to avoid bankruptcy, why should you even consider it?

Become aware of your finances – what your earn, what you spend and what you save. Plan to own a big asset like a home and start putting away money for it. Resort to disciplined spending; prepare day-to-day and periodic expense budgets to keep a tab on what you spend in excess. Follow the adages “Always keep your spending well within your income”, “Save for a rainy day” – they help you avoid many pitfalls in this age of commercialism when everything seems to be a necessity. Beware of credit card spending because very often it encourages splurging. Make your credit card payments diligently; else, the outstanding in the credit card account will keep building up and spring an unpleasant surprise some day.

If you have unmanageable debt, consider getting an unsecured debt consolidation loan. You can use this loan that is usually given over a long term and with low interest rates, to clear all your existing loans. Talk proactively to your creditor(s) about your impending bankruptcy - they may be able to reduce interest rates/ waive some fees/ reduce debt, to ensure your repayment.

Use some or all these tips to avoid bankruptcy in your life and be free of debt worries forever!

After Bankruptcy Credit Cards - Recover from Bankruptcy with a Credit Card