What many Arkansas residents and other people from across the United States have discovered over the past several years is that bankruptcy is a quite often misunderstood yet eminently effective legal strategy for securing relief from punishing debt levels.

Employing such a strategy is often a last resort for many consumers, who first attempt to work in good faith with creditors, some of whom do not return the courtesy. In fact, media stories in recent years have been replete with details regarding the abusive and hounding behavior of many debt collectors. Some consumers rightfully conclude that it is simply impossible to work with such people.

Many consumers also feel that there is a stigma attached to a bankruptcy filing, which they subsequently discover is not remotely the case. The nation’s bankruptcy laws were crafted to provide protection to consumers trying to manage insuperable amounts of debt and to help them gain a fresh financial start. In high numbers of cases, the debt that besieges people owes to factors entirely beyond their control. A case in point is unexpected medical debt. Another is a job lost to outsourcing.

When a person does ultimately decide to file for bankruptcy, he or she must duly consider what type of filing best promotes their objectives.

The answer to that internally posed query might not readily emerge, given that Chapter 7 and Chapter 13 bankruptcies are quite distinct processes entailing different rules and aims.

The former, for example, is closely focused on the liquidation of unsecured debt, and employs a “means” test to determine income eligibility. The latter is centered on the reorganization of debt through a planned timetable of repayments to creditors.

Such a quickly sketched differentiation is of course highly simplified, and a consumer interested in knowing more about bankruptcy should consult with a proven debt relief attorney. Doing so can truly help to promote a new financial beginning.

Source: Michigan State University Extension, “The difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy,” LaShawn Brown, May 23, 2014