Personal Bankruptcy

Avoid bankruptcy by getting qualified debt relief help. You may be able to settle up to 70% of your debt.

Filing for bankruptcy should only be considered as a last resort. Bankruptcy stops lawsuits and any other attempts by creditors or collection agencies to collect from you.

However it stays on your credit report for a 10 years which is a long time. This will make it difficult for you to get car loans, to buy a home and to buy any other items that require credit. Bankruptcy could also prevent you from getting certain types of jobs.

It can completely destroy your credit for a long time. There are many other drawbacks to bankruptcy but if this is the only alternative then you can file the papers yourself. If not find a good attorney or law firm that can guide you through the process. Find a lawyer that specializes in bankruptcy or research it yourself. There are many books and online resources that can give you more detailed information on how to file.

There are two types of  personal bankruptcy,  Chapter 7 and Chapter 13. Each must be filed in Federal Bankruptcy Court.

* Congress made massive changes to the bankruptcy laws in October 2005. The purpose of theses changes is to get consumers to file under Chapter 13 as opposed to Chapter 7. It's also much harder to file for bankruptcy under the new laws.

Chapter 7 Bankruptcy

Under Chapter 7 all non exempt assets are liquidated or turned over to creditors. Exempt property may include automobiles, work-related tools, and basic household furnishings.  The new bankruptcy laws have changed the time period during which you can receive a discharge through Chapter 7.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy allows people with a steady job to keep property like their home or car. In Chapter 13 the court approves a repayment plan that allows you to use your future income to pay off debts during a three-to-five-year period while keeping your property. A court-appointed trustee oversees the repayment plan. After you have made all the payments under the plan, you receive a discharge of your debts.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, and debt collection activities. Both also provide exemptions that allow people to keep certain assets, although exemption amounts vary by state.

However bankruptcy does not eliminate secured debt, so you could still lose your home if you fall behind in your mortgage payments. You also will be required to pay other debts such as student loans, alimony, child support, income taxes, and legal fines.

One requirement under the new law is that you have to meet with a credit counselor for six months before applying for bankruptcy. You are also required to attend money management courses at your expense.  Click here to find out how to file for bankruptcy.

Consult with a good bankruptcy lawyer before taking any steps. When consulting an attorney or law firm, keep in mind they generally charge for every minute that they talk with you. Look for a free consultation or a package deal.  

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