Not everyone knows that there are different options for individuals who wish to file for bankruptcy. "Bankruptcy" is actually a set of different legal paths that may allow individuals to relieve themselves of their debts and help them start their financial lives with fewer obligations. Before a Colorado resident throws themselves into the bankruptcy courts, they should be sure they understand the different requirements that they will face for their different bankruptcy options.
When Colorado residents are struggling under unsurmountable debt, they may feel lost and hopeless. However, they do have options, and one of these options may be filing for Chapter 7 or Chapter 13 bankruptcy. A bankruptcy filing can discharge many unsecured debts, such as credit card debt. However, not all unsecured debts can be satisfied through the bankruptcy process.
As many of our readers in Colorado may know, many people in our nation are struggling under an insurmountable amount of student loan debt. Many factors, including the economy, job markets and skyrocketing tuition prices, have led many people to take out student loans that they are ultimately unable to pay back. Unlike other types of loans, generally, student loan debt cannot be discharged through Chapter 7 or Chapter 13 bankruptcy. However, there are always exceptions to the rules, and in very limited circumstances a person may be able to discharge their student loan debt through bankruptcy.
The world of bankruptcy law can be confusing, especially if you are already under a great deal of stress due to your precarious financial situation. In the end, most people in Colorado who decide to file for bankruptcy will choose between Chapter 7 and Chapter 13 bankruptcy. However, there are some differences between Chapter 7 and Chapter 13 bankruptcy that are worth noting, so you can make an educated decision about which option, if any, is right for you.
While a college degree is a valuable asset, obtaining that degree is not usually cheap. Many college students need to take out loans to finance their education. Unfortunately, the costs of a college education have risen significantly in recent years and obtaining a high-paying job upon graduation is not always possible. Therefore, our nation is facing a student debt crisis in which many debtors in Colorado and across the United States are unable to pay back their student loans.
When a debtor is contemplating bankruptcy, they will either file for Chapter 7 bankruptcy or Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, with some exceptions, the debtor's assets are liquidated, and the proceeds are used to pay of their debts. The process usually can be finished within a matter of months. In a Chapter 13 bankruptcy, the debtor may retain more assets, but will have to follow a court-ordered repayment plan that could last three to five years.
A primary goal of many bankruptcy filers is repairing their credit rating. It may initially seem impossible, and a common misconception is that bankruptcy will have an irreparable, negative and long-lasting impact on one's credit score. Thankfully, this isn't the case: with care, time and patience, it is definitely possible to have a good credit rating once again.