People file for bankruptcy for a number of reasons. Some of the most common reasons are related to personal loans that have gone awry. Whether you took out a loan for a car, a house, or something else, getting behind on payments could eventually lead to bankruptcy.
Fortunately, millions of Americans have found debt relief through personal bankruptcy. With this unique financial tool you may be able to totally clear some or all of your unsecured debts.
In order to learn more about personal loans and bankruptcy, fill out the form below to connect with a local bankruptcy attorney who can provide a free case evaluation.
During bankruptcy, your debts are treated a bit differently depending on what type of bankruptcy you file. There are two forms of personal bankruptcy: Chapter 7 and Chapter 13.
Under Chapter 7 bankruptcy, you may be able to clear some or all of your debts accrued through personal loans that you were unable to repay.
Technically, Chapter 7 may help you eliminate unsecured debts. Many types of personal loans are considered unsecured debts, including payday loans, and it is common for such loans to be eliminated through bankruptcy.
Other forms of debt that may be discharged include:
In order to file for Chapter 7, you must meet certain income and other eligibility requirements, some of which are established in the means test. If your debts are discharged in Chapter 7 bankruptcy, there are no repayments of those included debts.
On the flip side, Chapter 13 bankruptcy gives filers an opportunity to reorganize their debts into a more reasonable repayment plan. If, at the end of the repayment period, a filer has successfully met his or her obligations, unsecured debts including personal loans may be discharged.
If you are eligible to file, Chapter 13 may also let you address other types of personal loans, including those related to your home mortgage and car purchases.
At the very least, Chapter 13 allows individuals more time to meet their personal loan obligations. In addition, Chapter 13 may allow you to keep your car from repossession, or save your home from foreclosure.
After filing for bankruptcy, it is important to begin rebuilding your credit as soon as possible. With your newfound financial independence, the next few steps after bankruptcy will feel unstable, but they may yield a period of fulfilling personal growth.
One primary method of rebuilding your credit is to start taking out reasonable personal loans. By making timely payments on reasonable loans, you'll show creditors that you've left bankruptcy with a renewed sense of financial responsibility.
Unfortunately, some individuals are in a vulnerable financial position after filing for bankruptcy. So, a savvy filer should beware of the following pitfalls:
Of course, rebuilding your credit is different under the laws of your particular state. In order to learn more about personal loans after bankruptcy in your region, connect with a local lawyer today.