File Bankruptcy and Start Over FinanciallyDid you know that, 43% of U.S. men and women spend more money than they earn in any given year, and one in 70 American households will file for bankruptcy? Debt, especially given the current economy and job market, can be crippling. A growing number of Americans are struggling to make ends meet, and some may believe that they are simply out of options. Filing bankruptcy offers business owners, families, and individuals a rare opportunity: a clean slate. When should you file for bankruptcy, and what are the different types available?

Chapter 7

Why file bankruptcy? Chapter 7 bankruptcy eliminates just about all debts (excluding taxes, student loans and child support). Wage garnishments, liens, and even civil judgments are often forgiven after filing bankruptcy. Debtors with absolutely no means of making payments should consider Chapter 7.

For these reasons, Chapter 7 is the most popular among struggling businesses. The Pittsburgh Penguins, for example, made history by being one of the first, and only, sports teams to file bankruptcy. The team continued making the news by filing not once, but twice – first in 1975, and again in 1998. Debtors who have it particularly rough may be able to appeal court fees. Filers with incomes 150% below the poverty line can waive court costs. Americans should keep in mind that mandated fees, such as paperwork fees and attorney costs, will still apply.

Chapter 13

Chapter 13, on the other hand, typically involves restructuring or redistributing debt. Filers are still responsible for a certain level of payment, but they also get to keep much of their property and personal assets. Chapter 13 can be a smart option for Americans with credit card debts less than $1,081,400 and car loan and real estate debts less than $360,475.

Debts can easily get the better of us, and, the more debts you have, the less likely you are to be able to climb out of it. Why file bankruptcy? File bankruptcy to eliminate most debts, and start over financially, or favor Chapter 13 to redistribute debts and hold onto important assets.