Bankruptcy Proceedings - Personal Bankruptcy

Personal Bankruptcy

Before you choose to make the very important decision of filing a personal bankruptcy, here are a few facts that you should know about bankruptcy and

the procedures involved.

Time and time again, our financial situations get the best of us. Some of the common reasons for filing a personal bankruptcy are unemployment,

marital problems and unexpected financial hardships. It seems that after exhausting all of your options, there seems to be nothing left but the stressful

relief of personal bankruptcy. Although you have probably figured that this is your last resort, it is best to surely see if personal bankruptcy is the right

choice for you.

Just because you have fallen behind in your bills does not always signal you should file a personal bankruptcy. While the personal bankruptcy does

relieve you of your financial obligations, it is a permanent decision that can negatively affect your credit history. Debt that is just a few months behind

and can be caught up should be just that — caught up. Bill consolidation should be left open as an option. However, if you feel that your finances will

not allow you to keep up your new obligations, personal bankruptcy is the way to go.

The decision to file for personal bankruptcy is a long and tedious one. Filing personal bankruptcy means you turn to the courts to have your debts

liquidated, making you no longer liable to pay your debtors. Your three personal bankruptcy options are a Chapter 7, Chapter 11 and Chapter 13. The

procedures and qualifications for filing personal bankruptcy are different from state to state. The below explanations are a general overview of what

each type of personal bankruptcy may entail.

Chapter 7 bankruptcy is declaring total personal bankruptcy. This is simply saying that

you want to have all of your debt erased. There are ways to keep your house and car

under this personal bankruptcy option. Every debt has to be accounted for, even if you

are in good standing with the creditor. However, if you do not owe any money to a

certain creditor, you do not have to include them in your personal bankruptcy. The

courts are going to let those creditors that you owe know that you are going to file for

bankruptcy. Even if you pay off some of the debts before filing a personal bankruptcy,

there is a great chance that you will still lose your credit privileges with that creditor.

Not all debts are capable of being liquidated and subsequently discharged. Student

loans, tax debts, child support, alimony, tickets and suspensions of driver's license that

were the result of criminal activity (i.e. drinking and driving) and purchases that are

less than six months old that are considered luxury or unnecessary are all just a few

debts that are not eligible to be claimed when filing personal bankruptcy.

Chapter 11 bankruptcy is used primarily for large businesses, but can be an option for

personal bankruptcy. Under this form of personal bankruptcy, you are asking the courts

and your creditors for extended time to pay off your outstanding credit obligations. This

includes any monies that are owed to the government. Chapter 11 is like reorganizing

your bills so that you can get back on track. It will allow you to stop repossession,

foreclosure, tax liens and other consequences from defaulting on payments, allowing

you to keep your possessions. The time to pay off these debts is about six years, but can be extended with the permission of the creditor.

Chapter 13 bankruptcy is similar to chapter 11. But, chapter 13 is more of a repayment plan. You get to keep all of your assets with this form of personal

bankruptcy. You simply must devise a plan to help pay them off. You are given a time frame for which to repay the debts, usually three to five years. You

must have a steady and regular income. There are also standards of unsecured and secured debt that must be met.

Filing for personal bankruptcy can cause major future financial setbacks. Personal bankruptcy will stay on your credit

report for up to ten years. This of course will hinder your chances of receiving auto and home loans, refinancing home

loans and credit cards. Some companies do look at personal bankruptcy as a way to help you receive a second chance.

They will let you receive some loans, but you are subjected to very high interest rates because you are considered high

risk. Some people will say that the companies allow you these second chances because they know you cannot file a

personal bankruptcy again for another seven years. It will also become public record, staying on your record for up to

twenty years. This can sometimes affect you when you are trying to get approved for rent on an apartment, obtain

different types of insurance, open a bank account, as well as look for possible employment opportunities.

After making the decision to file a personal bankruptcy, you undergo the process of having to find a company that will

represent you. This is a very important step in your personal bankruptcy process. Just because you file for a personal

bankruptcy does not necessarily mean that your debts will be discharged. Be sure to research the company to ensure

that they have successful turnouts. Do not just focus on getting the cheapest company to represent you. Yes, personal

bankruptcy can be costly. But it is more important to choose a company that knows what they are doing.

Again, it is never an easy decision to file for a personal bankruptcy. It's something that you have to do as a last resort

option and it's helpful to consult as many possible alternative organizations before you make up your mind. After all, this

is your future that you are dealing with.

What is bankruptcy, how it all works, the different types of bankruptcy and what they mean.

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