From Yahoo Finance: 2025-06-16 12:17:00

Many Americans face significant debt, with an average household debt exceeding $100,000, including mortgages, auto loans, student debt, and credit cards. When considering bankruptcy, weighing the pros and cons is crucial. Chapter 13 bankruptcy allows for a structured repayment plan over three to five years, helping retain important assets like homes.

An automatic stay granted upon filing for bankruptcy can halt foreclosures, wage garnishments, and repossessions from creditors. Chapter 13 bankruptcy typically requires secured debts to be repaid eventually, while unsecured debts may be partially forgiven. Bankruptcy can affect credit scores for up to 10 years, impacting future loan opportunities and job prospects.

Before declaring bankruptcy, explore options like debt management plans, negotiating with creditors, and debt consolidation. Repayment strategies like the snowball method target smaller debts first, while the avalanche method prioritizes high-interest debts. Tapping into retirement funds or taking high-interest payday loans can have long-term financial consequences.

Cosigning a loan can be risky, especially when in debt, as missed payments can impact credit. Seeking structured repayment strategies and guidance from a financial advisor is essential. It’s important to avoid quick-fix solutions and focus on long-term financial stability. Subscribe for more financial tips and advice from Moneywise.



Read more at Yahoo Finance: I’m 51, recently divorced and now I’m $180,000 deep in debt. Would I be better off declaring bankruptcy?