Bankruptcy

Bankruptcy is definitely a viable option for certain individuals that have experienced an extreme hardship. However, no financial expert will ever suggest bankruptcy as a first option. It may seem like an easy way out but there are consequences that may not make it worth it.

There are 2 major types of bankruptcy that applies to consumer debt:

Chapter 7 – or “liquidation” or “straight bankruptcy” involves the liquidation of most of the debtors unsecured debt. A trustee appointed by the court gathers and sells your nonexempt property. The proceeds from the sale pay your creditors. You’re able to keep any “exempt” property.

Chapter 13 – or “personal reorganization bankruptcy” Involves a court appointed trustee to organize a repayment plan that sets forth with specificity the manner in which debtors will settle their debts or pay off in full over three to five years.

Both Chapter 7 and Chapter 13 bankruptcy represent a severe negative impact on your credit for 7-10 years. Even filing for bankruptcy can be costly as a typical filing can cost up to $2,500. Filing for bankruptcy could affect your employment status or ability to get hired.


  • May have a negative impact on your employment status or future employment.
  • In a Chapter 13 filing, you may end up paying 75 – 100% of your debt back.
  • Chapter 7 is much more difficult to qualify for under the new bankruptcy laws.
  • May result in higher interest rates on future loans.
  • Carries a negative stigma, mental stress, and other burdens.
  • Bankruptcy is a “last resort”.
  • Chapter 13 completion rates average only 32%.

To learn more about the Bankruptcy code and the process involved with filing bankruptcy, please visit the US Courts – Federal Bankruptcy website for more information.

NOTE: Anyone considering bankruptcy as a debt relief option should contact a Bankruptcy Attorney.

Get Your FREE Debt Consultation

Take the First Step in Controlling Your Debt

Simply call us to speak with a credit counselor, or complete the form below.

Free Savings Quote

Contact us today for your FREE savings quote