At first, it doesn’t seem too much of a problem. Your credit card debts are growing and you did miss one debt payment, but you can handle that. As the months go by, however, the debt only gets worse. Finally, you realize you can’t pay your debts at all and your credit line has gone down the tubes. Is it time to consider bankruptcy, and just what does that mean?
As an individual, you may file for a chapter 7 bankruptcy, so named for a chapter of the federal Bankruptcy Code. It is also called liquidation bankruptcy because it allows you to sell some of your property to pay your debts. This process will take about 3-6 months, although it will stay on your credit record for about 10 years.
There are other pros and cons to bankruptcy under Chapter 7. You can keep most of the possessions you own and the wages you earn as well as any property you are able to buy after you file for bankruptcy.