All things being equal, the best bankruptcy option has got to be Chapter 7 bankruptcy.
Although Chapter 13 might seem like the better alternative for people who have pledged certain assets to obtain credit (the same credit they cannot repay, as it turns out), Chapter 13 has a great deal of disadvantages.
The first that comes to mind is that, if you mess up on your Chapter 13 repayment schedule, you can be forced into filing Chapter 7 bankruptcy anyway! So why not just take a deep breath and take the plunge into Chapter 7? Sure, you will lose your assets in a liquidation sale.
Sure you will be unable to obtain credit for 7 long years or so after your discharge.
Sure, your friends, family, neighbors, or anyone else can dig into the details of your case.
But imagine the freedom.
Imagine all of the things you could afford after filing for Chapter 7 bankruptcy! Instead of spending hundreds of dollars every week on bill payments, that money can be saved toward retirement.
You could enjoy an exotic vacation every other month now that the money that was getting wasted on debt can now be spent at the travel agency.
With Chapter 7 bankruptcy, every nickel and dime you take home can be allocated to other, more important areas of your personal financial life.
Plus, no more phone calls from pushy bill collectors who care little about your inability to repay the money you borrowed but prefer trying to get blood from a stone -- good luck and stop calling! The great thing about Chapter 7 bankruptcy is that it puts an end to all of the sacrificing, all of the calls, all of the wasted dollars on high-interest debt.
It's the answer, the reset button on debt, the solution that seems...
hmm...
too good to be true? Now, Chapter 7 bankruptcy definitely has its place.
People who have lost all sources of income and cannot afford to feed themselves, let alone make bill payments, have an inherent RIGHT to file Chapter 7.
Yes, it's a right under the Bankruptcy Code.
(In fact, everyone can exercise that right, even if they should not).
As such, when no other option is available to heavily indebted individuals, couples and families, no further resources (which are scarce to begin with) should be spent on avoiding what is not only inevitable, but necessary on so many different levels (financial, psychological, and social for starers): file Chapter 7 ASAP! But people who can manage to repay debt without resorting to bankruptcy (with a bit of introspection, sacrifice and focus even people making a meager income can repay debt) should do something.
They should repay their debt.
And in doing so, they earn self-respect.
They earn improved credit ratings.
They earn privacy.
They earn the right to pursue the American Dream of owning and growing their own business and getting the financing they need to do so.
They earn bragging rights.
And, probably most importantly of all, they learn to appreciate every single dollar they ever earn.
And, above all else, make the difficult debt repayment process worth it!