Most of the posts on this blog relate to stories of interest on bankruptcy and personal finance for the benefit of its Saint Cloud readers. This week's post tackles a straightforward comparison of the two most common forms of personal bankruptcy: chapter 7 bankruptcy and chapter 13 bankruptcy.

Chapter 7 bankruptcy is a form of legal financial management that permits a person to sell off assets and property under the supervision of the court. The money collected from those sales is then used to pay off the individual's debts. A person is entitled to keep some of his property during the asset liquidation phase but such exemptions can depend on the individual.

Unlike chapter 7 bankruptcy, chapter 13 bankruptcy does not involve liquidation. Rather, chapter 13 bankruptcy lets a person use some of his income to pay down debts through manageable payments. Once a court accepts a person's schedule of debt repayment that person works with a court-appointed trustee who manages the debt repayment plan.

Both forms of bankruptcy can help a person who is struggling with economic challenges and who cannot get financially get ahead on his own. Consulting with a bankruptcy attorney can be a good way to determine which form is best given an individual's particular situation.

Despite their comprehensive coverage of discharging a person's debts, both forms of bankruptcy carry with them significant costs that can stay with a person for a long time. Filing for bankruptcy can affect a person's credit which in turn can keep a person from finding housing, vehicle loans and even employment. Though it can be an effective way to overcome one's financial struggles, a person may consider speaking with a bankruptcy expert before filing to fully understand all of the process's repercussions.

Source: CBS Boston, "Personal Bankruptcy, The Basics," Jan. 6, 2014