The idea of a “do-over” is incredibly appealing, especially if you’ve been struggling for a long time. If your debt has become a burden that you are simply unable to get out from under, then your best bet for that do-over is probably filing for bankruptcy, particularly a Chapter 7 bankruptcy. Though bankruptcy is considered a taboo subject or black mark by some, hundreds of thousands of individuals and businesses opt to file for bankruptcy each year, providing themselves with the ability to escape from collection calls and creditors and begin with a clean slate.

Bankruptcy is not a magic wand. It will erase debts that are dischargeable, and in that way, it can definitely give you a fresh start, but it also has limitations. It cannot eliminate every debt – if you owe child support, alimony, federal, state, or local taxes, or debts incurred through fraud, you will still be liable for paying them. Additionally, if any of your debt is secured by property, as is the case with an automobile loan or a mortgage, there is a chance that your asset will need to be sold in order to pay back your creditors. And of course, if your debt was the result of undisciplined spending habits it will not automatically make you better at budgeting or money management. But a bankruptcy filing will eliminate credit card bills and other debts and put an automatic stay on collection efforts that may have led to harassing phone calls.

A bankruptcy filing is a complex process that aims at doing more than getting rid of debt. In order to have your filing approved you will be required to pass a means test, as well as to enroll in and complete a course that teaches you how to manage your money more effectively. Once your filing has been approved and your debts discharged you will be free of your debt, but you will also have to start over again in terms of building your credit and regaining the trust of any lenders that you might need in the future. Doing this takes time and patience. You will likely have to pay higher interest rates or be limited in the amount of credit that you are granted, for a significant period of time. Still, it is often the best way to get your feet back under you so that you can move forward.

If you have questions about whether bankruptcy is the right answer for you, we can help. Contact us today to set up a time to meet.