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Should you choose bankruptcy? Which kind is best?

Bankruptcy is sometimes seen as a kind of "dirty word," but the reality is that bankruptcy has the potential to be very helpful for people who are struggling with their finances. Since the recession, many people have struggled to get their finances back on track.

While many Americans are back on their feet, not everyone is. For those who still struggle through debt and financial issues, bankruptcy is an option.

What options do you have as an individual?

As an individual, you have a couple options when it comes to filing for bankruptcy. The first is Chapter 7 bankruptcy, also known as liquidation bankruptcy. The second is Chapter 13 bankruptcy, which is a repayment plan. Both can work well, but there are some differences.

First, Chapter 13 is for people who still have a good income and who earn more than the acceptable amount to file for Chapter 7 bankruptcy. With Chapter 13, you make payments for three to five years. After that time, any further debts are eliminated.

With Chapter 7, you may have all your debts eliminated without payments. However, you do need to liquidate some of your assets. There are exceptions to the rule, and your primary vehicle, some clothing and other items you need may be protected against sale. It's a good idea to talk to your attorney about how to protect your assets before you file for this kind of bankruptcy.

Either of these are an option if you're struggling with debt. In a short amount of time, you can have firmer financial footing for your future.

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