Many people see bankruptcy as an admission of failure, irresponsibility or weakness. They fear the prospect of filing for personal reasons, adding to the strain of financial distress and uncertainty. While there is no question that declaring bankruptcy has its consequences — among them, appearing on your credit score for up to ten years and affecting your ability to receive a mortgage or other loan — filing bankruptcy still affords relief when you are overwhelmed by debt.

Why declare bankruptcy?

More than 1.2 million Americans filed for personal bankruptcy in 2012 — a number that, while on a decline over the last few years, is still significant. Individuals and families declare either Chapter 7 or Chapter 13 bankruptcy when their debts become unmanageable.

  • In Chapter 7 bankruptcy, most debt is discharged after the filer pays off what he or she can through liquidation of certain assets.
  • In Chapter 13, the filer agrees to reorganize his or her debt and pay creditors a percentage of the debt owed.

In both of these situations, the intrusive calls from collection agencies stop. And while it is not an immediate clean slate, filing bankruptcy does allow you to continue living your life without being in a constant state of panic. Filing bankruptcy can often prevent or postpone a home foreclosure. It should, however, be noted that student loan debt is not forgiven in personal bankruptcy cases, unless you have become physically or mentally disabled.

Businesses can also declare bankruptcy, and in 2012, more than 42,000 filed. Most businesses file either Chapter 7 or Chapter 11, which is a reorganization bankruptcy for corporations, individuals, partnerships and other entities. In fact,filing bankruptcy is sometimes seen as a strategic move for businesses, allowing them to remain in operation even if they owe large sums due to legal fees or other debts.

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Goldbach Law Group specializes in

Chapter 7, 11, and 13 Bankruptcies


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