What You Should Know About Bankruptcy

Filing bankruptcy is not only a last resort legal action; it is also a very complicated legal action that definitely needs the expertise of a lawyer. When thinking about bankruptcy, you first need to decide if bankruptcy is right for you. If it is, then you need the help of an attorney to decide which type of bankruptcy is required for your particular situation.

The decision to file bankruptcy can be brought on by many different circumstances. The most common circumstances are divorce, medical hardships and credit card troubles. In cases of divorce, bankruptcy is often inevitable. The sudden change in financial level and the added burden of court costs, extra expenses and child support often cause one or both parties to get behind on their financial obligations.

In the case of medical hardships, high medical bills can sometimes overburden people even if they have insurance. This is even more likely to happen if the person experiencing the medical emergency is also the family breadwinner.

The most common case of financial hardship is incredibly high credit card balances. After carrying numerous high credit balances for a certain period of time, many people find themselves unable to make anything but the minimum payment and sometimes not even being able to make that. Then, when the high interest rates are added in, people find themselves in a situation where repayment is often impossible.

Whether your situation arose from one of the above financial problems or not, sometimes bankruptcy is the only answer to your monetary problems. Once you have decided that bankruptcy is the answer for you, you will need to enlist the services of a lawyer to decide which type of bankruptcy to file and to help you navigate the many complex bankruptcy laws and regulations.

There are four main types of bankruptcy, Chapter 7, Chapter 13, Chapter 11 and Chapter 12. Chapter 7 is the most common form and can be used by businesses and individuals. Chapter 13 is the second most common form, but it limited to use by individuals only.

In a Chapter 7 bankruptcy, a debtor's property is divided into to categories, exempt and non-exempt. Exempt properties include things that the debtor will be allowed to keep like their home and automobile. In the case of exempt properties, the debtor is allowed to keep them as long as he or she continues to pay for them. If a person cannot continue to make payments, the owner of the loan may repossess the property, even after a bankruptcy has been finalized. Any non-exempt or unsecured property will be sold to cover the debtor's financial obligations. Debts such as credit card debts and medical bills can be written off with this type of bankruptcy, but other debts like school loans and taxes cannot be.

In Chapter 13 bankruptcy, the debtor is required to come up with a way to repay his or her debts, but these debts usually do not have to be repaid in full. In most cases, a creditor will agree to take a small percentage of the owed debt as opposed to losing all repayment all together. This form of bankruptcy is preferable for those individuals that wish to keep all of their possessions and just need a chance to catch up on their financial obligations. It does not, however, excuse a debtor from priority debts like taxes and child support.

In order to qualify for Chapter 13 bankruptcy, an individual must have a yearly income level that allows for repayment of each of his debts within three to five years. After three to five years of consistent repayment, the debtor's obligations are released.

After you have researched bankruptcy and decided that it is right for you, you need to contact an attorney that specializes in bankruptcy to help assure that you follow all legal guidelines and are protected from further collection activity.

You can find a bankruptcy lawyer in your home city at Legal Match

More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Debt Relief Information:

Related Articles

Currency Trading Fee Concept
Troubles with Global Economy; Do you see future problems with our global economic plans to make a one world system, where free trade and prosperity can rein the world over. Many world leaders have agreed a one-world system is best for all.
The New Bankruptcy Law -- How Will It Affect Debt Negotiation?
In April 2005, Congress made sweeping changes in U.S.
Bankruptcy, Is It A Way Out
Negotiations with creditors have failed. Repossession is imminent and foreclosure proceedings have begun.
Save Money When Going Out
It seems as though whenever we go out for the night, it costs much more than we originally intended to spend. Having a 'night on the town' shouldn't cost you a whole weeks salary.
Credit Repair - Understanding The Basics
What is Credit?Credit means that you are using someone else's money topay for things. It also means that you are making a promiseto repay the money to the person or company that loaned youthe money.
Going Bankrupt in the World
It all starts by defaulting on an obligation: Money owed to creditors or to suppliers is not paid on time, interest payments due on bank loans or on corporate bonds issued to the public are withheld. It may be a temporary problem - or a permanent one.
Learn The 15 Debt Elimination Steps You Must Take Immediately!
What Everybody Needs To Know..
Creating A Realistic Budget
Budgeting -- ooh, what a scary word! If you want to frighten someone whose finances are out of control, suggest that they tally up their expenses on a piece of paper. We all understand the value of such an exercise, but when it comes to the practicality of putting a budget together, we get cold feet.
Credit Card Debt Freedom is Possible
Credit card debt have you drowning financially? You're not alone. The average American household carries $9,205 in credit card debt, according to CardWeb, an online industry tracker.
Should You Invest In Savings Or Payoff Your Debts?
I have faced this financial question 8 years ago and recently I have friends asked me this same question. I think I should write it up so that it may help some of you that having the same situation.
Life on a Debt Management Program
Signing up for a debt management program is easy; it's a matter of finding a company you feel comfortable with that is difficult. There should be no pressure added from the company you speak with, joining a DMP is your decision and you should feel like you are in a partnership with the company, meaning you both have control over your financial situation.
Can You Escape the Trap of Ever Growing Debt?
It's difficult not to be concerned when facing numbers like these:43% of U.S.
Future Secured? Oh Really?
A headline for a retirement annuities flyer declares "FutureSecured!" Was your reaction like mine? Yea, sure!Is our financial future ever that secure? Maybe for a few. But for the majority of us this is not true.
Bank Like a Banker
The business of banking has changed dramatically over the last decade. Because the cost of doing business the old-fashioned way is no longer effective, banks are interested in changing their customers' behavior by encouraging electronic banking alternatives whenever possible.
Debt Validation: Do you have to pay ?
It happens all the time. Debt collectors try to collect on debts that consumers have no knowledge of or never owed in the first place.
Debt Relief -- Why Most Programs Have A 75% Failure Rate
Debt consolidation, equity loans, credit counseling, debt management plans, even Chapter 13 bankruptcy - it doesn't matter which of these debt programs you're talking about. They all suffer from one fatal flaw, the number one problem that causes most people to fail at eliminating their debts through these techniques.
Is Independence Overrated?
Happy Independence Day from The Money Motivator!If you don't celebrate "The 4th of July" like we do in the United States, today still presents you with an awesome opportunity to examine your independence.Independence means the quality or state of being dependent.
Credit Counseling or Bankruptcy: Which is Best for You?
People often get to a place where they simply can't pay their bills, especially in today's economy which is not particularly sympathetic toward the poor or even the middle class. Inflation has impacted nearly every facet of daily life including food, gas, rent, clothes, utility bills and more.
Is Filing for Bankruptcy an Option for You?
Bankruptcy laws give debtors a way to resolve debt by dividing their assets among their various creditors and in some cases will allow debtors to be freed of outstanding debts that cannot be paid, even after the division of assets. For individuals who find themselves unable to pay their debts, bankruptcy can be a viable option.
Debt Free Living - 5 Tips To Get Out Of Debt
A few times I wonder what sort of credit system moved the global economy 200 years ago. If the intention of getting into a business is meant to 'help' fulfill the needs and wants of someone, I don't see how credit card salesmen can drove more people into debt and backruptcy.