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Bankruptcy

Bankruptcy is a federal court proceeding that eliminates all or a portion of an individual's debt, giving them a chance to start over. You may want to consider bankruptcy if you have tried budgeting, debt consolidation, and cutting your spending, but still find that you are unable to pay your debts. Before filing for bankruptcy, contact a skilled and trustworthy attorney and evaluate the possible advantages and disadvantages, including the following:
• Court-ordered child support, taxes, or student loans will not be canceled.
• Bankruptcy stays on your credit report for ten years.
• Court records are public record and newspapers publish bankruptcy listings.
• If you have little money or property, your creditors may already think of you as “judgment-proof,” that is, they don't believe that they can get any money from you.

There are two common types of personal bankruptcy under the US Bankruptcy Code:
• Chapter 7 is the most common form of personal bankruptcy and is often referred to as “straight” bankruptcy or liquidation because it allows your assets (what you own) to be liquidated or converted to cash to pay creditors. All creditors are permanently stopped from trying to collect money from you.
• Chapter 13 bankruptcy is a repayment plan, although the total debt you repay will probably be less than what you owe. This plan requires you to have a consistent income that would support a three-to-five-year payment plan. An accurate budget is essential to a successful Chapter 13 filing. If you decide that bankruptcy is a good path for you to follow, consult an attorney who is certified in bankruptcy practice and who can help you evaluate which option is best for you.