For people whose credit card debts have become unbearable, they can consider filing bankruptcy to get rid of their outstanding balances, late fees, interest charges, etc. However, not everyone in debt is eligible to file bankruptcy. If you have no idea about this financial option, I would suggest that you need to do some research first.

Knowing the facts related to bankruptcy is indeed important because it will affect your decision. Hence, before you decide, you are reminded to learn more about this financial solution because obviously your credit will be badly affected and this will remain on your credit report for 10 years.

Here is some important information you must know:

• A personal bankruptcy can be filed under Chapter 7 or Chapter 13 of the US Bankruptcy Code. You will not know whether you fall under Chapter 7 or Chapter 13 until the bankruptcy court decides on it. The court needs to assess your income and the total value of the assets you possess first. If your current financial status does not fulfill the requirements, your application will be rejected.
• A Chapter 7 Bankruptcy allows the debtors to discharge their credit card debts completely. It means the debtors will be completely debt free after the proceedings. However, if a person falls under Chapter 13, he or she is required to participate in a repayment plan to eliminate the debt owed. The debtors still have the financial obligations. They will only become debt free after they complete the plan.
• Declaring bankruptcy doesn’t mean that you can become debt free instantly. Chapter 7 bankruptcy proceedings can be completed within 4 months. Its duration is definitely shorter than debt settlement process. On the other hand, for Chapter 13 bankruptcy proceedings, the time required can be up to 5 years. The time frame to complete the whole process is quite long.
• In certain circumstances, filing bankruptcy is unnecessary. For instance, if your credit card debt is older than your state’s statute of limitations for debt, you are FREE from bearing any financial obligation. From the legal point of view, you don’t need to repay the debt amount anymore. You are reminded not to declare bankruptcy because it will make your credit worse.
• Please bear in mind that NEVER EVER file bankruptcy just because you don’t want to clear your outstanding balances on your credit card statement. You are not allowed to eliminate the debts that you have accrued within 60 days. If you do so, your creditors may sue you for swiping your credit cards with the intention of filing for bankruptcy. In short, you can’t simply ignore your obligations through bankruptcy.

Last but not the least, having bankruptcy on your credit report may have some adverse effects on your life. You are reminded to find out the possible consequences and consider carefully before taking any action. Only take this financial option as your last resort unless you have no way to go.