If you think you need to file for bankruptcy to get out of debt, you may first want to consider some alternatives. If you elect to go through a Chapter 7 bankruptcy, you'll have to liquidate many of your assets. While some can be protected, there's still a chance that you'll need to sell or allow your home to go into foreclosure, will have to sell extra vehicles, or will need to eliminate other assets to pay down your debts.
Fortunately, there are some alternatives to Chapter 7 bankruptcy. Chapter 13 bankruptcy, for instance, isn't a kind of liquidation bankruptcy. Instead, you start on a payment plan for between three and five years. As long as you make payments on time, then you'll emerge from bankruptcy at the end of the payment period without further debts. This process also allows you to keep your home and other assets by reaffirming debts.
Chapter 13 bankruptcy is a great idea for those who still have a solid income. It allows you to consolidate your debts into a single monthly payment as well as allowing you to pay the debts back over a longer period of time. During the bankruptcy process, creditors will not be allowed to call you; instead, they'll call and negotiate with your attorney.
No matter what you decide to do, your attorney can help walk you through the process. With any kind of bankruptcy, the immediate benefit is the halting of foreclosure proceedings and other collection activities. This gives you time to find a way out of debt, instead of further threatening your income and assets.
Source: United States Courts, "Alternatives to Chapter 7," accessed Dec. 23, 2015