Personal bankruptcy is something that many people start to consider when they discover that they are drowning in debt. It is not a decision that most people make lightly and some are even embarrassed about the possible necessity of taking such a drastic step, even though the records show that the majority of people who file for personal bankruptcy do not do so due to financial mismanagement, but due to things outside of their control such as divorce, unexpected medical expenses, job loss, etc.
For personal bankruptcy, you have a choice whether you should file Chapter 7 or Chapter 13 bankruptcy. Each of these methods has different requirements and is used to accomplish different goals, so you need to be aware of which one is best suited to your particular situation.
Many people think that filing personal bankruptcy is just a matter of filling out the right forms and submitting them, but the days when that statement was true are long past. With the recent changes in bankruptcy law, this is no longer a do-it-yourself process, and you may wish to consider getting a good bankruptcy lawyer that can guide you through the maze of forms and paperwork. The money spent on a bankruptcy lawyer can more than pay for itself in time saved and assets not liquidated.
You need to know what kind of debt you have that is causing you to consider personal bankruptcy because there are certain kinds of debt that cannot be discharged with any type or chapter of bankruptcy. Some of these would include federally funded student loans, alimony, and other type of debt, so if these types of debt make up a good percentage of your total indebtedness, bankruptcy is not going to help you.
It may seem that personal bankruptcy is an outstanding method to just wipe your financial slate clean and start over, it really is not as simple as that. It can take months for your bankruptcy to be approved, regardless of whether Chapter 7 or Chapter 13 is the better method for you to use. In addition, a federal bankruptcy judge needs to approve your filing, and there is a chance that you will not even be able to file, since bankruptcy is no longer automatically approved as it once was.
You will need to plan to attend credit counseling seminars from a court-approved agency as part of the filing process. This is a new requirement which is part of the recent major changes in the bankruptcy laws. The fact that your filing is not due to financial mismanagement is immaterial, this is still a requirement.
Interestingly enough, many people have not thoroughly investigated all other possible alternatives to bankruptcy before they start the filing process. You should check out your options, since bankruptcy is a huge step and will leave a large blemish on your credit report for the next seven to ten years, which will make it difficult to get credit cards, loans, even employment when people see that on your credit report.
Being in debt is almost a way of life, but debt needs to be manageable and it is up to you to keep it manageable. Bankruptcy may be the best option, but before taking such a drastic step, you need to make sure you have investigated all other options so you can be sure that bankruptcy is indeed the most viable option available to you at this point in your life.
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