What individuals need to know about filing for bankruptcy

If they feel trapped by their debt, many individuals in Maryland and beyond feel like they have no choice but to file for bankruptcy. While filing for bankruptcy carries its own set of fees and emotional hardships, it also serves to eliminate or reduce payments on a large portion of the debt that the individual is carrying. In total, households in the U.S. owe trillions of dollars in debt. Many people put off filing for bankruptcy as long as they can, but some come to realize that they don’t have another choice.

Some people siphon money from their retirement savings to avoid filing for Chapter 13 bankruptcy. However, financial experts recommend against doing this. If an individual does choose to file bankruptcy, they have a few different options. Most individuals choose Chapter 7 or Chapter 13. Both options require filing fees, and if the individual hires an attorney, that might add more costs to their bill.

Once the individual files for bankruptcy, most debt collectors will cease communication. Filing for Chapter 7 erases some forms of debt immediately, but the debt collectors might still be able to claim property like cars or houses. Filing for Chapter 13 gives the individual a few extra years to pay back their debt so that they don’t have to relinquish their property.

Filing for bankruptcy has its benefits, but it does leave a massive hit on the individual’s credit score. However, they can build up their credit score again over a period of several years.

Individuals who are filing for bankruptcy may wish to speak with an attorney. An attorney might be able to help the individual figure out which form of bankruptcy they’re eligible for and help them take the steps they need to file for bankruptcy and end calls from debt collectors.