Personal Bankruptcy Help

A Personal bankruptcy filing is the legal process sanctioned by the US Bankruptcy Court and available to an individual in debt who is unable to repay their creditors. Through bankruptcy, an individual can seek to legally eliminate or reduce some or all of their outstanding debts. The simplest form of bankruptcy, referred to as Chapter 7 bankruptcy, allows the liquidation of all possible assets owned by the debtor in return for the dismissal of all outstanding debt. In Chapter 7 the debtor can claim certain property as "exempt", retaining this property to maintain the basic necessities of life such as equity in their home, car, personal clothing and other assets. These assets are often referred to and considered the "basic necessities of life". Once an individual declares bankruptcy, he or she can take advantage of the personal guarantee bankruptcy benefits, but cannot be discharged from debts for the next six years.

Types of Personal Bankruptcy

Chapter 7 Bankruptcy

Chapter 7 addresses liquidation of an individual's personal assets and is, by far, the most popular form of bankruptcy. Chapter 7 bankruptcy is specially designed to discharge some or all of the unsecured debts of an individual and offers creditors compensation by receiving the proceeds from the liquidating of some or all of the debtor's non-exempt property. Upon completion of Chapter 7 a debtor can get a fresh start.

Chapter 13 Bankruptcy

This chapter of the Bankruptcy Code addresses the financial rehabilitation for an individual having a proven, ongoing income who can repay the majority of their debts if given enough time, generally considered to be 3 to 5 years. Chapter 13 bankruptcy is structured to provide an individual a fresh start by allowing them to create a rescheduled or reorganized monthly repayment plan that is agreed to by all major creditors.

Which Personal Bankruptcy to choose?

Bankruptcy laws were revised by the US Congress in 2005. A major change, if the debtor decides to file personal bankruptcy, is it will be difficult to file for Chapter 7 if one’s income is more than the median income specified for that state in which they live. This is called the “means test”. It one does not qualify due to this test, their option becomes Chapter 13.

In Chapter 13 bankruptcy, referred to as "wage-earner bankruptcy” the debtor submits a repayment plan. All the assets belonging to the debtor are not liquidated. Instead, fines, interest amounts, late fee and similar charges are eliminated and special arrangements are made to pay some or all of the debts owed over several years.

BankruptcyOnly can help a debtor contact a competent, affordable personal bankruptcy attorney in their local area. This attorney can assist you in understanding the personal bankruptcy rules and deciding upon which personal bankruptcy fits your circumstances.

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Filing for Personal Bankruptcy

The main questions asked by a debtor while filing for bankruptcy are:

• Is filing personal bankruptcy the right decision?
• Are all debts dischargeable?
• Does one want to eliminate all debts or only certain debts?
• Is it cost effective to file for bankruptcy?
• What if one experiences more financial problems in the future?
• How will work and professional life be affected?
• Which of the personal bankruptcy laws should one consider?
• Finding a good bankruptcy lawyer.
• Filing properly in the U.S. bankruptcy court.