If your debt load has become unbearable or your finances keep you awake at night, it may be time to consider filing a bankruptcy petition. If you have tried to “work things out” with your creditors but your financial situation continues to worsen, then a bankruptcy filing may be the right solution for you. There are three options when you are considering a bankruptcy filing: Chapter 7, Chapter 13 and Chapter 11. The most common, quickest and most straightforward bankruptcy is a Chapter 7 case. When you do not qualify for Chapter 7 or when you are trying to save your home or some other asset that has value, you would file a Chapter 13 case. When Chapters 7 and 13 will not work for you, you would file under Chapter 11. Yet, no matter what chapter you file, you will be granted immediate relief from your creditors.
When you file a bankruptcy petition, your creditors (with some limited exceptions) must immediately discontinue any and all action against you. As such, as soon as you file for bankruptcy, you get relief from your creditors. Depending on which chapter you file, that relief may become permanent. If you file a Chapter 7 case and have few assets, the debts to your creditors may be discharged in their entirety. That means that you will never have to repay your debts. If you file a Chapter 13 case, have few assets and have only a small amount of money left over after paying necessary household expenses, you might be able to have all of your debts discharged (with certain exceptions) or have your debts discharged after making a small payment toward your creditor body (5-10% of your total indebtedness). Of course, in a Chapter 13, the exact figures and percentages are calculated on a case by case basis and are specifically tailored to your particular financial situation. In many circumstances, a bankruptcy filing provides you with more effective debt relief than trying to “work things out” directly with creditors.