Bankruptcy isn’t your only option.

Bankruptcy is a legal proceeding that makes it possible for consumers and businesses to gain some relief from their debts. There are two types of consumer bankruptcies that you may be considering:

• Chapter 7 bankruptcy: If you opt for this type of bankruptcy, you could have all of your debt wiped out. You would have to qualify for a chapter 7 bankruptcy through the means test and not everyone qualifies for bankruptcy especially if you make too much money or have assets that can be sold to satisfy the debts you owe to your creditors. 
• Chapter 13 bankruptcy: This option allows your attorney to offer a plan through the court to repay your debts over three to five years. Depending on the agreement, you may end up paying off some or all of the debt but you could end up paying the debts in full plus fees to the bankruptcy attorney and trustee in a chapter 13 bankruptcy. 
  

Chapter 13 bankruptcy is generally a better option because it affects your credit score for less time (seven years vs. 10 years), and it may allow you to keep some or all of your assets.

While bankruptcy can create a clean slate in some ways, not all debts can be included in a bankruptcy — some examples include court-ordered child support and alimony and most student loans. It can also stay on your credit report for up to 10 years, making it difficult for you to get approved for a mortgage, car loan, credit card, and other forms of credit in the future. 

Bankruptcy can also potentially interfere with your ability to get hired for certain jobs, obtain certain licenses as well as your eligibility for some forms of insurance.