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There are two important elements in recovering from a significant amount of debt. Income and time. You need to have sufficient income to pay both your living expenses and your debts. And you need time.

And if you have substantial debts, say a significant amount of credit card debt on top of a home mortgage, car loans and student loans, you may not have enough of either. This is because if you miss a mortgage payment or three, or simply are late a few times, depending on the terms of your promissory note, the entire balance of your mortgage could become due.

Now, if you have not slid over the precipice of foreclosure yet, and are organized and sufficient income that when you do the numbers, you can both feed and house yourself and your family, you may be able to avoid bankruptcy.

On the other hand, if the lender has moved to place your home in foreclosure, a Chapter 13 bankruptcy may be your only hope if you want to remain in your home. This should not be an emotional decision (even though we know it will be) because you need to be certain you can afford to pay mortgage arrears in you Chapter 13 plan and make your current mortgage payments as they become due.

If your finances are sufficiently dire, you may need to file a Chapter 7, and look for something more affordable, like an apartment until you are able to recover from your financial crisis.

A Chapter 7 can wipe out most of your debts, leaving you with level playing field from which to begin your financial recovery. A bankruptcy attorney can help you make an informed decision regarding filing a Chapter 7 or a Chapter 13., “How to Make $40,000 Credit Card Debt Disappear,” Steve Bucci, December 4, 2014