Personal bankruptcy quite different from business bankruptcy

Sometimes, people in Pennsylvania find themselves struggling to stay on top of their debt. Fortunately, if they can no longer stay afloat, they no longer have to try to do so on their own. Filing for personal bankruptcy may provide the financial relief they so desperately need.

When people think about bankruptcy, Chapter 11 bankruptcy -- which companies file -- often comes to mind. This process involves reorganizing and financially restructuring until a company is in a better position to repay its debtors. However, the personal bankruptcy filing process is far different.

Chapter 7 and Chapter 13 bankruptcy are the two main types of personal bankruptcy protection that can be pursued. Chapter 7 bankruptcy involves liquidating assets to eradicate as much debt as possible. Cash from the assets is essentially distributed to credit card companies, banks and other creditors. The individual must pass a means test before being approved for Chapter 7 bankruptcy. Meanwhile, with a Chapter 13 bankruptcy filing, a consumer must submit a repayment plan for paying off most or all of his or her debt in three to five years.

Consumers in Pennsylvania may be in dire financial straits due to becoming unemployed, incurring large amounts of medical debt or taking on too much consumer debt. In addition, they might face financial troubles following a divorce. However, they have the right to file for personal bankruptcy protection to finally overcome their excessive debts. An attorney can provide the guidance needed to navigate this process so that one finally achieves the second chance needed to thrive financially in Texas.

Source: refinery29.com, "What Happens When You File For Bankruptcy?", Judith Ohikuare, March 9, 2018

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