While it might not seem like it, filing for Chapter 7 bankruptcy is the first step to building your credit back up after burying yourself in debt. The process is not easy and it will take some time, but it is the best option if you have exhausted all other options and your debt still remains.
Under Chapter 7 bankruptcy, liquidation is the way of getting out of debt. Individuals with a regular income who are struggling with debt file under Chapter 13.
When you file for Chapter 13 bankruptcy, you are given the opportunity to restructure your debts and repay them over a period of 3-5 years via a payment plan, or the Chapter 13 plan. Chapter 13 is often looked to as a reorganization of finances – it is not a liquidation of your assets.