BASIC BANKRUPTCY INFORMATION
You're in debt way over your head. You can't get any
new credit anywhere. The collection agencies are hounding you day and
night. The emotional toll is starting to mount. Is bankruptcy the
way out? Maybe, but this decision must be given very serious
consideration. A bankruptcy will remain on your credit report for ten
years and does major damage to your credit score. You have to ask
yourself; is there any hope at all of ever getting these bills paid? If
not, the filing bankruptcy may be in your best interest. A chapter 7 or 13
bankruptcy will work for most people.
A chapter 7 bankruptcy for the most part wipes out your debts giving you the opportunity to make a fresh start. The process is also relatively simple. First you must fill out your chapter 7 forms on which you must list all your debts and all your property. The forms are then filed with the bankruptcy clerk in your county. A trustee is appointed to determine what property of yours must be turned over to the court. This will include all secured debt items such as cars, furniture, etc., unless you have these debts reaffirmed by the court and continue making payments on them. Your unsecured debt will be erased. Finally a discharge will be issued freeing you from repaying the debt that you filed in your bankruptcy.
A chapter 7 bankruptcy is for anyone who, for whatever reason, has absolutely no hope of repaying their debts. Not all debts are forgiven in bankruptcy. You will still be held responsible for, among other things, child support, alimony and taxes. Going chapter 7 is a serious action to take and should only be done as a last resort.
A chapter 13 bankruptcy is essentially a rescheduling of your payment obligations. Here, too, a court appointed trustee will handle your affairs. The role of the trustee here is to work out a three to five year repayment schedule of the debts listed on your filing. The trustee will act as a liaison between you and your creditors developing a budget for you and a repayment plan your creditors will agree to. Once this has been worked out and is approved by a judge you will begin making monthly payments to the trustee. The trustee in turn will make the payments to your creditors. At the end of your three to five year plan any remaining debt will be forgiven provided you have met all your court ordered obligations.
This form of bankruptcy is designed to give you some breathing room. It will stop collection actions and wage garnishments. Most importantly is allows you to make a good faith effort at paying off your debt. While still a serious action to take future creditors may not view this as negatively as filing chapter 7. But make no mistake; any form of bankruptcy will severely damage your credit worthiness.
The information provided here is over simplified and is meant to serve as a basic guide only. Bankruptcy laws and residence requirements will vary greatly from state to state. Additionally, no two personal financial situations are alike. If you feel you might be a candidate for bankruptcy then it is strongly suggested you consult with a competent bankruptcy attorney to fully investigate all of your options.
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