Bankruptcy doesn’t always happen for just one reason. It’s not as if someone takes out a loan, can’t pay it back, and suddenly has to declare bankruptcy. There are usually a lot of different factors that all contribute, and the overall financial situation can be very complex.
For example, it’s been noted that medical debt is cited most often in some studies that looked into reasons for bankruptcy. But even in these cases, medical debt is just said to be one of the “key contributors” that have been cited, not the entire debt. This means that people could also be facing issues with things like credit card debts, business loans, student loans, house payments, car payments and much more. Not everything can be discharged, but it’s important to understand the big picture when seeking solutions.
What options do you have?
The options that you have will depend on the specifics of your situation, including the assets that you have or the income that you earn on a consistent basis. You can still declare bankruptcy if you have an income, contrary to popular belief.
The first option is Chapter 7 bankruptcy, and it works by liquidating your assets. This creates money that you can then use to pay off some of the debt. The remaining debt can be wiped out.
The second option is Chapter 13, which generally doesn’t liquidate your assets and also doesn’t fully eliminate the debt immediately. Instead, it combines the debts that you have into a repayment plan. You can make those payments for the next few years.
Moving forward
If you are facing a lot of debt from numerous sources and you’re interested in the steps that you can take to alleviate it, it may be time to look into your legal options moving forward.