If you are carrying more debt than you think could ever pay back, bankruptcy may be something to consider. Due to the impact bankruptcy could have on your credit and your lifestyle, it is often considered the last resort.

Different types of bankruptcy:

Chapter 7

This method is the most common form of bankruptcy filed in the United States, and it could absolve you of any obligation to repay your unsecured debt. It is like starting your financial life over with a clean slate, but the consequences can be serious. Your credit can be tarnished for many years to come, and your assets can be sold to pay off your debts. Chapter 7 bankruptcy will not clear you of most tax obligations or any federal student loan debt. If you have a balance on these, you will still be responsible for paying it back. Qualifying for Chapter 7 has become more difficult since The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 introduced stricter means testing.

Chapter 13

Since it became harder to qualify for Chapter 7, more people are being forced into Chapter 13. If you file for Chapter 13 bankruptcy you will still need to repay some or all of your debts over time, but in some instances some of your debts may be reduced. Once a repayment plan has been worked out, you make payments to the court. The court then distributes money to your creditors at the direction of a court-appointed trustee. Needless to say, it’s a very intrusive process.

Chapter 13 bankruptcy takes longer and costs more than Chapter 7, but homeowners who work out a repayment plan with their bank may be able to keep their home.

Both types of bankruptcy will severely damage your credit, so the decision to file for bankruptcy should not be taken lightly. Make sure to consult with an attorney licensed in your jurisdiction before choosing this option.

Even if you feel that bankruptcy is your only option, there may be another way out. Contact Aleevly Debt Relief now at 877-506-5355 for a free evaluation on a bankruptcy alternative.


  • Debt obligation could be cleared (Chapter 7)
  • Creditors are barred from attempting to collect on debts
  • Process takes only 3-6 months (Chapter 7)


  • Significant, long-term damage to credit
  • Loss of all credit cards
  • Chapter 7 may be difficult to qualify for