Before deciding to file for bankruptcy, you need to understand what it entails. Most debtors and creditors have little knowledge of the process. This article will explain what bankruptcy is and how it affects individuals. Before filing, it’s essential to compile financial records. This will give you a better understanding of your current financial situation. Whether you choose to file for Chapter 7 or Chapter 13 bankruptcy will depend on your personal situation.
While bankruptcy may seem like a last resort, it can help you get out of debt and protect your assets. It does involve a lot of work and commitment. After all, you’ll have to continue making payments after bankruptcy. Moreover, it will negatively impact your credit history for seven to ten years. Therefore, it’s important to treat the process with respect. You can enroll in a pre-bankruptcy course. This course will teach you how to manage your money and avoid bankruptcy.
The median income for people who filed for bankruptcy in 2019 was $31,284. By contrast, the median income of people who filed for Chapter 7 was $41,532 (see figure below). Although bankruptcy will affect your credit score, it can also delay foreclosure and stop wage garnishment. Bankruptcy will also halt lawsuits. But it does come with a high price tag – between seven and ten years.