Most people might have to face heavy debt at least once during their lifetime. Financial burden can take several forms. If you are facing a serious financial burden, you have the option of filing for personal bankruptcy. Filing for bankruptcy is often used as a last resort and can be an effective solution to get out of debt. However, it may also affect your credit score and might make it difficult for you to get credit or purchase a home in the future. Besides the option of declaring bankruptcy, you can try to pay down your debt.
There are a number of ways to pay off student loan debt. Failing to pay off your loan might have severe consequences. There are certain government programs that may help when you are struggling with student loan payment. These programs either limit monthly payments to a fixed percentage of your discretionary income, or absolve you of your federal loans. However there is a strict eligibility criteria for such programs and only people who meet certain requirements can benefit from them.
Chapter 13 bankruptcy comes under Title 11 of the U.S. Code. Also known as reorganization bankruptcy or a wage earner's plan, Chapter 13 helps you impose a debt management plan on your creditors. Chapter 13 allows individuals to reschedule their debt and span it over the duration of the payment plan. Instead of selling assets to repay the debt, the debtor may use their gross income. Under Chapter 13 you may get to keep your assets. If you meet all necessary requirements, the creditors will have to follow the proposed debt management plan.