For some people, the first time they confront the amount of debt they have is when they check their credit report. If you have recently looked at yours and feel like you will continue to live a life in debt while struggling to make the minimum payments on all your accounts, you probably realize that it is time to do something about it.
You might consider bankruptcy at this point. This enables you to regain control of your finances in a responsible way. It is often the last resort for people who have mounting debts that aren’t going down despite making regular payments.
There are two primary types of personal bankruptcy, each of which is denoted by the chapter covering it in the bankruptcy laws. Chapter 7 is a form that wipes out many debts without the filer having to make payments on them. Instead, nonexempt assets go through a liquidation process to make money to pay off creditors. Chapter 13 requires the filer to repay a portion of their debts by making payments to the bankruptcy court.
There are two types of assets in bankruptcy. Nonexempt assets are those that can be taken by the trustee for liquidation. This includes things like second homes that aren’t considered vital to living at a basic standard. Exempt assets are those that you can keep despite the bankruptcy. This might include a vehicle or possibly your primary home. The type of bankruptcy you file impacts what category an asset is placed in, so be sure to find out about any assets that you are concerned about.
Living during bankruptcy
You will have to live on a tight budget if you file bankruptcy. You can’t open new lines of credit during the process, so you are going to have to learn to pay your bills and for other things with only your household income. You will have to go through credit counseling and take a class on financial responsibility as part of the bankruptcy. These can teach you tips to help you in the future.
Life after discharge
When your debts are discharged, your bankruptcy is over. You then have to determine whether you are going to try to rebuild your credit or continue living a cash-based life. This is a personal choice, so you can do what you feel is best for your needs. You may need to use secured cards to start rebuilding your credit.
Your financial health is one of the most important aspects of your life because it directly impacts how you live. If you are drowning in debt, explore all of your options in Georgia and get your case started if you feel you need bankruptcy protection.