In times that are as economically challenging as today, it’s becoming more and more common for consumers to get so deeply mired in personal debt that they can’t see a way out. Many then turn to the option of bankruptcy and contact a Bankruptcy Attorney in Harrisburg to help them move forward with resolving their excessive debt issues and hopefully start fresh and rebuild their lives. When you find yourself in this situation, it’s easy to hope for and look at bankruptcy as a miracle cure that will resolve all your credit problems, but it’s not a magic cure-all for your money woes and can have a serious impact on your future financial status. Understanding the different forms of bankruptcy as well as how they affect your credit rating is essential for making the right decision when it comes to solving your debt crisis as well as laying a solid foundation for your financial future.
There are several different forms of bankruptcy defined in the laws of the United States, but the two forms that are most relevant for individual consumers are known as Chapter 7 and Chapter 13. As understood in federal law, the goal of bankruptcy is for individuals who are deeply in debt to be able to resolve their issues, or, as the courts put it, “to find relief”, which is a phrase that most debt ridden consumers would probably agree with. Carrying around excessive debt and dealing with its effects is a mental and emotional burden that weighs down the soul. Being able to stop rapidly accruing interests and harassing phone calls is a major relief for these individuals. Chapter 7 bankruptcy is the simplest and easiest form of declaring bankruptcy, which makes it the top choice for the majority of bankruptcies filed in the United States. Once approved by the court, this ruling legally wipes out every debt included in the filing as though it never existed, which is why it is so popular with consumers. It’s important to note, however, that having a Chapter 7 bankruptcy filing in your history can be a very difficult obstacle to overcome when you try to rebuild your credit.
Chapter 13 bankruptcy, while still a critical blemish on a credit report, is often considered to be less damaging because it incorporates a payment plan so that the creditors do not walk away empty-handed. Filing for Chapter 13 is usually done by individuals who have a steady income and can afford to make some kind of repayment on a regular basis. The court, creditors and consumer work together to set up an effective plan that doesn’t place an undue burden on the consumer but also doesn’t leave the creditors with nothing. Successful completion of Chapter 13 bankruptcy demonstrates a commitment to owning up to and atoning for personal mistakes, which can make a poor credit report less damaging.
The type of bankruptcy that you choose is something that should be discussed between yourself and your Bankruptcy Attorney Harrisburg. Based on your personal financial situation, current employment, and state laws, you and your attorney can choose the right filing to allow you to make a fresh start and build a better future for yourself and your family.
Attorney at Serratelli, Schiffman & Brown P.C. represents clients in bankruptcy and other legal cases in Harrisburg, PA and surrounding areas.