Suzy Vanstrusen asked:

This is the scenario. You have ordered a copy of your credit report from one of the three major credit bureaus and as you open it, all you see are a bunch of outstanding balances that you need to pay off immediately. The problem is, it will be difficult for you to settle these debts since the interests alone have all ballooned out.

Add to your woes, you have just been laid off from your company. So how will you handle all these debts and bills each month?

Most of us encounter a similar problem. Recession has inflicted great damage to our financial stability. We found it difficult to retire all our debts. This problem may push us to finally decide on filing for bankruptcy. After all, bankruptcy can wipe off some and even all of our debts. And for sure having been discharged from bankruptcy, we can have a fresh start for us to slowly work on rebuilding our credit reports.

Aside from being retrenched from work, what other reasons can push people to file for bankruptcy? We will give you the four main reasons why people choose to file for bankruptcy.

Reasons Why People File for Bankruptcy

1. A recent, bad divorce. Divorce proceedings are not only time-consuming but also very expensive. People who underwent divorce settlements usually find themselves struggling to regain their financial stability. The reason is because a divorcee will need to pay a lot of charges. He or she must pay alimony charges, provide child support, and also settle the bills from his or her lawyers. And if a divorcee does not have a stable job, of course he or she will find it hard to keep up with his or her obligations. So, this is the main reason why divorcees commonly file for bankruptcy. They want to gain relief from all the worries and stress brought about by their financial difficulties.

2. Stop the Foreclosure on your house. A Chapter 13 Bankruptcy filed before the sheriff’s sale can save your house from foreclosure. This is why most people would rather have bankruptcy in their credit reports rather than lose their homes to foreclosure. Still, this arrangement can only work if the person who filed for bankruptcy can keep up with the repayment plan. Such plan gives specific details on how the person can pay all his mortgage arrears over a period of five years.

3. Provide Assistance in Repaying Student Loans. Though a student loan can never be discharged, taking the bankruptcy option can provide an opportunity for debt consolidation. This program will help you merge all your student loans and submit just one payment each month. And you won’t need to worry about your monthly payments. This is because the repayment plan will be based solely on your financial capability.

4. Challenge Fraudulent Claims of Creditors. Some lenders may try to collect more than what you owe them. They can easily impose high interest rates and fees since they can manipulate your credit accounts. Even if your credit file from the three credit report bureaus can prove them wrong, they will still insist that you pay the amount they have specified. You can free yourself from these unscrupulous lenders simply by filing for bankruptcy.

Copyright (c) 2010 Suzy Vanstrusen

Create a video blog

David Riche asked:

Bankruptcy laws are one of the important financial aspects in the United Kingdom. There are many chapters under bankruptcy, but three are most important:

Bankruptcy chapter 7
Bankruptcy chapter 11
Bankruptcy chapter 13

Today, we will discuss about the chapter 7. Majority of people like to file the bankruptcy under chapter 7 because debtors get rid of almost all existing debts without any problem. And he/she gets an opportunity to make a fresh start again. It is not easy at all. After getting the bankruptcy, you have to face lot of problem. According to experts, it is like a black spot on credit history which can not be eliminated for next seven to ten years. This is the only reason why it is important to discuss properly with experts or consultant before filing.

Bankruptcy laws help people to make new financial start when he/she is not able at all to repay existing debts. While filing a bankruptcy, people can discuss the matter or case with attorney. Attorney is person who can help you a lot. They read your case properly and try to understand the situation as well. After evaluating the case, they give you nice advice whether you should file or not. Under bankruptcy chapter 7, courts have right to sell the property of debtors to recover the money of creditors and they do so as well.

Debtors are required to file bankruptcy petition which contain the complete information about the creditors, for example, number of creditors, debts amount, total debts, individual debts etc. Many times, people file the bankruptcy just to save themselves from debts. It is strongly recommended not to follow this practice.

Create a video blog

Mike Shovan asked:

Bankruptcy, the Bible and Christianity

We live in a time like no other. Here in Michigan, many of us are struggling to just to keep up with our day to day living expenses. As a result of divorce, job loss or illness, many of us have incurred debts that we can never repay. Many Christians feel guilty about filing for bankruptcy. We know that bankruptcy is a legal right guaranteed by the Constitution – but still – we are buried in guilt because of our strong Christian beliefs.

Before I filed bankruptcy myself back in 2005, here are some things that I thought about.

The Bible Does Not Condemn Bankruptcy

First and foremost, the Bible does not condemn bankruptcy. In fact, the Old Testament provided that debts had to be forgiven every 7 years? No questions asked – no bankruptcy petition necessary. Here was the law: At the end of every seven years you shall grant a release of debts.

Similarly, the Old Testament commanded people to free their slaves every 7 years. The Bible refers to debtors as slaves to their creditors. So, based on the Bible, creditors are required to free their debt slaves every 7 years. Interestingly, under the bankruptcy law – you can file for Chapter 7 bankruptcy every 8 years.

Jesus and the Bible Both Talk About Mercy, Forgiveness and a Fresh Start

In both the Old Testament and the New Testament, compassion, mercy and justice were ideals that were superior to material things and economic concerns – like repaying credit card loans.

The Bible also speaks to compassion for those who are oppressed by over-burdensome debts. The Old Testament provides many examples of the need for compassionate treatment of the poor and for the preservation of the family unit – compassion for the poor and support for the family were always more important than the material concern of repaying debts.

Deuteronomy 15:7-10 says: “If there is a poor man among your brothers… do not be hardhearted or tightfisted toward your poor brother. Rather be open-handed and freely lend him whatever he needs. Be careful not to harbor this wicked thought: The seventh year, the year for canceling debts, is near, so that you show ill will toward your needy brother and give him nothing. He may then appeal to the LORD against you, and you will be found guilty of sin. Give generously to him and do so without a grudging heart; then because of this the LORD your GOD will bless you in all your work and in everything you put your hands to.”

Jesus taught us about the law of mercy and the law of forgiveness and the importance of being gracious to everyone – even debtors. Jesus said “It is easier for a camel to go through the eye of the needle, than for a rich man to enter into the kingdom of God.” He went on to teach “Use worldly wealth to gain friends… so that when it is gone, you will be welcomed into eternal dwellings.” Finally, Jesus taught us to “forgive and you shall be forgiven.”

Sin is a type of spiritual debt. In the Lord’s Prayer, Jesus told us to ask God to “forgive us our debts [sins] as we forgive our debtors [those who sin against us]“. Sin creates a spiritual debt. Borrowing money or using a credit card produces a financial debt. Through the eyes of Jesus and under the law of mercy – both types of debt can be forgiven. As with any act of mercy, someone must bear the cost of forgiving the debt. Jesus bore the cost of our sins by dying on the cross. In bankruptcy, your creditors must mercifully bear the burden of the forgiving your debts understanding that God will bless them for these acts of forgiveness and mercy.

Jesus taught us about the importance of forgiving financial debts to teach about God’s forgiving nature and the Christian principle of forgiveness. Jesus said “When they had nothing with which to repay, he freely forgave them both.” On a spiritual level, through God’s grace and mercy, Jesus gave us a “fresh start” by canceling all our “sin” debts through His suffering and death on the cross. Here in modern times, the US Bankruptcy Court will help overburdened debtors by giving them a fresh financial start.

Modern bankruptcy laws – just like these Biblical provisions – allow debtors to keep certain property when they file bankruptcy so that they can get a fresh start. These “fresh start” provisions discourages debtors from going into debt-bondage again – just to survive.

Jesus Condemned Excessive Interest Charges

The Bible prohibited anyone from charging excessive interest. Current credit card interest rates of 35% or pay day loan interest in excess of 2000% would have been strictly forbidden.

Exodus 22:25-27 says: “If you lend to one of my people… who is needy, do not be like the money lender; charge him no interest. If you take your neighbor’s cloak as a pledge, return it to him by sunset, because his cloak is the only covering he has for his body. What else will he sleep on? When he cries out to me, I will hear, for I am compassionate.”

Leviticus 25:35-37 says: “If one of your countrymen becomes poor and is unable to support himself among you, help him as you would an alien or a temporary resident, so that he can continue to live among you. Do not take interest of any kind from him, but fear your God, so that your countryman may continue to live among you. You must not lend him money at interest or sell him food at profit.”

Deuteronomy 23:19-20 provides: “Do not charge your brother interest, whether on money or food or anything else that may earn interest.”

Jesus relied on these Biblical principles when he admonished the “money changers” and removed them from the Temple. Jesus “poured out the changers of money and overthrew the tables.” Jesus repeatedly talked about the importance of placing love and compassion above greed and wealth saying “If you lend to those from whom you hope to receive, what credit is that to you? Even sinners lend to sinners, to receive as much again. But love your enemies and, do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Most High; for he is kind to the ungrateful and the selfish.”

The Bible and Jesus Both Promote the Family Unit

The support of family and a stable society are found all throughout the Bible. Wealth was viewed as a blessing from God which resulted from obedience and was based on God’s compassion. Being compassionate for the poor and forgiving debts were all tangible ways that Israelites could show compassion for each other and honor God by following His law.

These principles are all found in our modern day bankruptcy laws. The underlying principle is that debt can be canceled to achieve some higher purpose – like the preservation of the family unit and the stability of our society.

Seek Counsel, Confess and Move On

If you can repay your debts, you must. If you can’t, then you should determine how God would have you freed from the bondage of debt. The Bible tells us to seek wisdom and guidance from God and to seek Godly counsel.

If you have mismanaged your finances, confess your failings to God. You can receive God’s forgiveness and cleansing. Remember, there is no condemnation or guilt to those who are in Christ Jesus. Jesus, by His love and mercy, gave us a fresh start, a new birth. Bankruptcy is based on the law of mercy with divine origins and will help you get a fresh start – a new life!

The Bankruptcy Laws Are Based on the Bible

The bankruptcy laws were written with Biblical principles in mind. Any person who files for bankruptcy must have “clean hands” and fully and honestly disclose all the facts regarding their financial matters. Debts involving fraud, drunk driving, and deliberate wrongdoing can’t be discharged. Moreover, the bankruptcy law does not allow the discharge of child support and alimony debts or student loans or taxes. Through these restrictions the bankruptcy laws seek to balance justice and equity. Just like the Bible, our founding fathers recognized the importance of bankruptcy to help overburdened debtors get a “fresh start.”

I hope that this short article helps you with your decision to seek counsel and relief from your burdensome debts. The Bible and Jesus condemned excessive interest on loans and credit cards. The Old Testament required that creditors forgive their debtors and free their slaves every 7 years.

I hope that you can see the connection between the bankruptcy law and the Biblical teachings of both the Old Testament and Jesus. Mercy, forgiveness and a fresh start are central themes. The law allows you to get out from under burdensome debt so that you can provide for your family and live a good Christian life.

Caffeinated Content – Members-Only Content for WordPress

Paula Barton asked:

Is bankruptcy an option?

This is something that you should really only consider as a last chance option. Although it is possible to declare bankruptcy and still rebuild your life afterwards, you need to know the full truth before you make any solid proceedings in this direction.

Bankruptcy should never be a first option for anyone looking at debt and credit problems, it should always be a last option. And even then you need to be completely certain that you are willing to take that last step and deal with the consequences that will follow. So, now that I have hopefully given you an idea of how serious you need to be to even be considering bankruptcy as an option, we can take a look at it with due seriousness.

Bankruptcy

What does bankruptcy mean, and how does it affect you. Well, to begin with, you need to find out the pertinent details about bankruptcy in your own area/ state/ country.

The laws change from place to place, and before you look to file bankruptcy proceedings, you should ideally check things over with a lawyer or other such professional, to find out where you will stand after filing for bankruptcy.

The long and short of it though, is that once you file for bankruptcy, your creditors etc, will not be able to ask you for monies, or otherwise, owed to them. This is generally known as a ‘stay’, as in a stay of all proceedings against you, which means that your creditors cannot take action against you.

Once proceedings have moved along and you have been declared bankrupt according to the laws of your state or country, matters will then depend on what type of bankruptcy was declared to begin with. As I said, all laws regarding bankruptcy vary from place to place, but the there are generally two different forms of bankruptcy filings available to individuals, families etc.

For businesses, the forms of bankruptcy and the outcome of what they have to do, is different. You should ideally check with a qualified person dealing with bankruptcy for more information on these. You will have been required to declare at the time of filing for bankruptcy, your debts and any assets which you posses.

Generally, you will find that once you have been declared bankrupt, you are discharged from most of your debts, however, some debts will remain depending on the type of debt it is, for instance child support.

Your assets, those which are not exempt from being liquidated that is, will be sold off to discharge your debts. And depending on the state/ country etc, you will not be able to file for bankruptcy proceedings again for a certain number of years.

If you are thinking seriously about filing for bankruptcy, you should really get in touch with someone who knows what they are doing on this front, and get some qualified professional help to get you through the entire procedure.

Remember that you need to have everything in order, and that you cannot be found to be ‘concealing’ any debts or things, as this can be constituted as fraud. There are many things that you should learn about, before you file for bankruptcy, the least of which, is what happens to you after you have been declared bankrupt.

Create a video blog…instantly.

Peter Gitundu asked:

Filing for bankruptcy should not be the only option for you to consider. There are other considerations that could save you from the financial mess that you are in. One of the major consequences that result from bankruptcy is the tainting of ones image. Furthermore, your records remain in the insolvency offices for up to ten years. It also becomes very difficult to get credit facilities or even to secure employment.

With the many disadvantages that come with insolvency, it is only wise that you be informed on how you can avoid getting into the situation. To begin with, you can start attending financial management classes to be trained on how to handle your money. Ask for professional advice before your financial world crumbles on you.

Debt consolidation is also considered another way of avoiding insolvency. This means that you could talk to your creditors, through a debt management firm, and have your debts cut off by a certain percentage. All your debts are then brought on the table after the reduction and they are treated as one. Installments are then determined and all you do at the end of the month is write a check to the debt management firm.

They then calculate the percentage to send to each creditor. This insolvency prevention method allows you continue with your business without interruption from your creditors. Doing this prevents having your name on the bankruptcy records. It also trains you to work on a budget and actually stick to it. Furthermore, no one will ever have to know about your financial crisis.

Caffeinated Content

Joseph Then asked:




While you can file bankruptcy whenever you wish, there are limits that will effect whether your debts are discharged. Bankruptcy is a legal process and as such there are a lot rules involved.

You can file bankruptcy as many times as you wish, but your debts can only be discharged every 8 years. If the court sees that you have filed bankruptcy in the previous 8 years then your debts will not be discharged and you will have wasted your time and money filing.

So What Do You Do

The limits on bankruptcy can be hard if you end up with financial problems too soon after you have already filed a bankruptcy. In order to prevent this from happening you should be well prepared before you ever file bankruptcy in the first place.

You need to understand the process and make sure that you get all dischargeable debts filed in the bankruptcy case. You should also make sure that you are financially stable enough to rebuild after the bankruptcy.

Another thing you must do is make sure that you are responsible after your bankruptcy. Do not go out and rack up new debts. Be smart about credit. Only get credit when you now you can afford it.

Avoiding Future Bankruptcy

To avoid a need to file bankruptcy again you need to get your finances in order. That starts with a budget. You have to budget everything you spend money on. Wipe out careless spending and make sure you cover all the necessities.

Pay bills first always. Put away some money in savings for emergencies second. Then you can spend money on whatever else you need. It is all about being smart with your money and avoiding the credit trap.

Stay away from high interest credit cards and other credit offers that seem to be taking advantage of you. Do not get into an agreement unless you can be sure you can afford it without having to dip into savings.

Filing bankruptcy is a privilege and limits are placed to help avoid people taking advantage of the system. If people could just file bankruptcy all the time then the whole idea of credit would fall apart because lenders and creditors could not afford to stay in business. Credit is important, so avoid having to file bankruptcy again by being smart about your money. Worry more about budgeting then when you can get your debts wiped away again.

Create a video blog…instantly.

Steve T Young asked:

Before I file bankruptcy myself, I must consider all things possible because bankruptcy is only my last choice. I have to understand what bankruptcy means in my situation; will it me do some good or maybe will it just back fire and just drag me down even deeper. Filing bankruptcy myself is very personal. I know this is my life and it is only me who can determine my success on how will I be able to rise again from this situation. Choosing which type of bankruptcy to file is a little bit tricky. I must know whether chapter 7 or chapter 13 is the right one to file. I can the chapter 7 type of bankruptcy by myself, which if I qualify, can make things so much easier for me. All my debt will be discharged in exchange for the liquidation of most of my properties. I can file bankruptcy by myself with a chapter 13 type of bankruptcy which certainly most people will qualify. The only problem is the process and requirements to file that type of bankruptcy can be a little bit expensive.

I can file bankruptcy by myself by going online and surfing the net; there are a lot of websites that offer easier, fast, time saving, and convenient ways that I can file bankruptcy. All I need is a computer, an internet connection, an idea on what bankruptcy is and its laws. I love the comforts of my home so when I file bankruptcy online inside my house the stress are less. I do not have to worry about the forms getting lost or worrying if I missed something in the form. The websites will have someone email me right away so that I would know if I miss something and I can correct it as soon as I received it. If I were to go outside and drive to different government agencies to process my papers and something goes wrong with my paper, like I missed to fill out something or it got lost, it would take more weeks just to have my paper processed.

I can file bankruptcy by myself. I can hire a lawyer full time, he can prepare all the papers for me, guide me through the process and all I need to do is pay him expensively. The other thing I can file bankrupt is to study hard the subject of bankruptcy law. I can prepare all the forms and papers and file them all by myself in court but that would take so long with so many headaches.

The best way for me to file bankruptcy by myself is to find a bankruptcy petition preparer or a good bankruptcy lawyer. They can help me with my paperwork and I only pay them a flat fee. Then I go on my own and do the rest. This is the best way, the safest and cheapest way to file a bankruptcy. For more information on how to file bankruptcy by myself, visit the link below.

Caffeinated Content – Members-Only Content for WordPress

Malika Bajpai asked:

Bankruptcy is a relief to the debtors who are really worried about their debts. Bankruptcy has manifold aspects. The debtor files for bankruptcy under any of the suitable chapters as introduced by US code.

Under bankruptcy chapter7, a debtor gets relief in form of exempted property which he /she can retain as his/her possession. This procedure of safeguarding a certain amount of property in favor of the debtor actually aims for a fresh start when they are overburdened by debts. As for an example, in many states the defaulter is allowed to keep clothing, household furnishings, an expensive car (may be inexpensive one that depends on the state law). Even after the closure of the bankruptcy cases the debtor needs at least some basic assets to lead his life further. Hence the bankruptcy code identifies basic needs and provide various property exemptions for the debtor.

Just like the rules for the exempted property varies from state to state, the percentage of exemptions enjoyed by the debtor is actually determined by the district court. There are also few limitations in this case, as all the properties of the debtor do not come under this category. The assets which are not discharged according to the chapter 7 bankruptcy code are excluded from this category. As it is already discussed, that the properties like household furnishings, cars are considered to be exempted similarly if the debtor is having any retirement fund or any other such kind of a fund it is considered to be out of reach of the creditors. Actually the amount of exempted property of the debtor depends on the state where he resides. Among the different types of exempted property for the different districts a few has been mentioned below:-

a) Tools for trade exemption – If the debtor is a motor mechanic or a dentist and the tools used by him are for earning their livelihood is considered under exempted property.

b) Farm tools exemption – If the defaulter is farmer in that case also the code according to the district law permits to keep the tools with him if his primary occupation is farming. However in some states farm tools include items which can be held in hand like hoes, axes, pitchforks, shovels, scythes. Whereas in other states farm tools also include ploughs, harnesses, mowers, reapers and other tools.

c) Crop exemption – The code also permits debtor to keep some products that are obtained as results of farming and raised annually or gathered in a single season.

d) Building materials exemption – It also permits a debtor to keep his certain amount of items needed to build or maintain structures like lumber, bricks, stones, iron. however this is not allowable in all states

e) Furnishings exemption – It also permits the debtor to keep a certain amount of furniture, equipments in his home and other things through which the home is decorated like carpets, drapes etc.

f) Health aids exemption – the debtor can also save the items which help him to keep his health maintained like wheelchairs, crutches, hearing aids. States either consider all the health aids as exempted or limit the total dollar amount.

g) Heirloom exemption- The bankruptcy code allows the debtor to pass certain assets which are possessed from generation to generation and which have some special emotional value or fiscal value.

h) Homestead exemption- It also saves a particular value or particular acres of farmhouse. The amount that the debtor can protect depends on the state where he lives. In few states unlimited homestead exemption is provided i. e. even a house worth millions of dollars cannot be taken under the liquidation of the chapter 7 bankruptcy code. On the other hand few states have no homestead exemption at all.

i) Animal exemption – Bankruptcy code also allows the debtor to keep some animals which are household pets, livestock or poultry. The animal exemption differs from state to state. In few states debtors are only allowed to keep livestock and poultry but not pets.

j) Appliance exemption- It also permits the debtor to keep some of the household equipments consumed by the help of electricity, gas or propane which may include refrigerator, stoves, washing machine, etc.

k) Arms & accessories exemption- The debtor under this code is allowed to keep some weapons which are the part of a soldier outfit or uniform such as the belt packs but not the clothes etc.

l) Household goods exemption – A debtor can also keep his household utensils which include linens, dinnerware, pots, and pans and small electronic equipments like radio toasters etc

m) Burial exemption – The debtor can also protect a cemetery plot, tomb, monument or the cash to purchase a burial plot. In some cases a few states allow the debtor to claim the a burial exemption only if the debtor does not use his homestead exemption. This exemption is available in most of the states

n) Jewelry exemption – This saves certain assets of the debtor which include articles of adornment and fashion like jewelry, and watches. However expensive jewelry is usually not included under this category although many states declare wedding and engagement rings. In most states the total jewelry exemption ranges from $250 to $1, 000.

o) Motor vehicle exemption- under this a debtor can save his self owned motor vehicle. In case if his motor cycle costs $10, 000 but the state in which he is residing allows a car exemption of $2, 500 then the debtor is still under debts of $8, 000 to his creditor as he has only equity of $2, 000 ($10, 000 – $8, 000) for himself ( this proves that the debtor can be able to pay his car payments). The debtor on the other hand if fails to pay it then the creditor can croak the car and sell it out in auction.

Kansieo.com

David Siegel asked:

We begin with the creation of the automatic stay. The stay is automatically created at the time of bankruptcy filing.

The automatic stay is actually a unique feature. If a creditor attempts to collect from the debtor in any way after the bankruptcy was filed and the automatic stay was enacted, the court can undo creditor’s actions. For example, if a car was repossessed without bringing a motion to lift stay, that car, can be requested to be returned to the debtor. So let’s say you filed your case, your case has been filed, and all of the sudden one of the creditors that has security on your car, purchased money security interest, comes in and repossesses your car. Well that means you can go and ask the court to make the creditor return the car back to you, because what the creditor did was actually illegal, and the creditor can actually be punished for that. So, the automatic stay has some benefits and one of the actual benefits is that it allows you to stay in a house you are surrendering for almost a year.

Taxes and Bankruptcy

Now, let’s talk about taxes, taxes owed to the government that were accumulated within three years prior to the bankruptcy won’t be discharged. However, if you file your taxes then you can actually get your taxes discharged that were accrued prior to three years of filing. So, let’s say its 2008 right now. Taxes that you were supposed to pay in 2004, 2003, 2002, 2001…. as long as you filed them, can actually be discharged.

Not paying your taxes can have a significant consequence. For example, the interest rate can amplify the amount you owe significantly. In a couple of years you can go to actually doubling your debt. Now, once bankruptcy is filed the interest on the debt stops.

Personal Guarantees on Businesses

There are different kinds of bankruptcies there is the business and personal bankruptcy. A lot of people have small little businesses that went downhill and are actually bringing owners along for the bankruptcy. Of course if you have an S corporation it’s a different kind of entity and it’s not totally connected to the owner. Let’s say a debtor has an S corporation, a body shop or a restaurant, whatever it is, in order to actually discharge the business debt, some of the liens that are from that S corporation, some of the credit cards that are on that S corporation, you actually have to file bankruptcy for the S corporation itself. However, most S corporations and other businesses have loans that are also secured by the debtors themselves, by the owners of the S corporations and not only by the S corporation itself. These loans cause the owners of the S corporation and the S corporation to have to file bankruptcy together.

Most of the time lenders won’t give you a loan just for the S corporation knowing that you can easily just file bankruptcy under the S corporations without being liable for the rest of the loan. Therefore most of the loans are secured by personal guarantees and by the corporations themselves. In this scenario both the owner of the S corporation and the S corporation has to file bankruptcy and that’s the only way you’re going to get discharged from that debt completely.

Caffeinated Content

Jay Fleischman asked:

Bankruptcy is a difficult process, but it can be made easier when you realize that different situations call for different types of bankruptcy cases. If you decide to file without a lawyer you may end up in the wrong type of case, which is a reason to sit down and speak with a bankruptcy attorney before making a potentially disastrous move.

These are six different types of bankruptcy chapters:

Chapter 7 Bankruptcy: This type of case is also called “liquidation” or “straight” bankruptcy. You will receive a discharge of most types of unsecured debts (credit cards, personal loans, overdrafts, medical and dental bills) but some other bills are not going to be wiped out. In return for this discharge of debt you will be required to surrender certain types of property. Most people file for bankruptcy under Chapter 7, but will opt for other solutions if they have debts that would not be wiped out or would lose property by doing so.

Chapter 13 Bankruptcy: This type of case is called “repayment” bankruptcy. You will be required to repay a portion of your debts in return for keeping all of your property. Chapter 13 is most commonly used by people who do not qualify for Chapter 7 or who want to use the federal laws to repay debts such as past-due mortgage and car loan payments over time in order to save their home or automobile. Chapter 13 payment plans last 3-5 years depending on your household income, property and debt levels.

Chapter 11 Bankruptcy: Formerly reserved for big business interests, Chapter 11 is now being used by consumers who would otherwise file for Chapter 13 but do not qualify due to the amount of debt that they owe. Chapter 11 is extremely complex and costly, but can help if you’ve got a debt load above the limits for Chapter 13.

Chapter 12 Bankruptcy: This is similar to Chapter 13, but is reserved for family farmers.

Chapter 9 Bankruptcy: This is used by municipalities and governmental entities that need to file for bankruptcy.

Chapter 15 Bankruptcy: The purpose of Chapter 15 is to provide effective mechanisms for dealing with parties and property in more than one country.

As you can tell, most individuals file for bankruptcy under Chapter 7 or Chapter 13. The mechanisms for handling these types of cases are well-defined, and most experienced bankruptcy lawyers have a solid understanding of both.

When making a decision on which type of case to file it’s important to speak with an attorney who can give you enough information on how you would be affected. Don’t hire a lawyer who pushes you into one type of bankruptcy or the other without fully explaining everything to you.

Caffeinated Content