Personal Bankruptcy Is Not As Simple As It May Look

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.

One of the things you need to determine for personal bankruptcy is whether Chapter 7 or Chapter 13 bankruptcy is better for you in your situation. The laws and requirements of these are significantly different, and depend on a large variety of factors that are particular to your situation.

Most people believe that the process of filing personal bankruptcy is just filling out the right forms and submitting them to the right place. That statement may have been true at some point in the past, but it is certainly not true any longer. Bankruptcy is no longer a do-it-yourself process due to the recent major changes in bankruptcy law. Obtaining the services of a good bankruptcy attorney can more than pay for itself when you consider the amount of time you will save and perhaps even assets you can retain when you are being represented by someone very familiar with bankruptcy law.

You should also be aware of the type of debt that you have when you are considering personal bankruptcy, since there are certain types of debts that cannot be discharged via bankruptcy, such as student loans, recent credit card charges, and several other things. So if this type of debt is a major portion of your indebtedness, you need to realize that those items will still exist after you have filed.

Personal bankruptcy is neither quick nor simple. While it can wipe your financial slate clean so you can start over, the entire process will take several months to accomplish, and this does not matter which chapter you are filing. You should also be aware that a federal bankruptcy court judge will review your case and approve your bankruptcy so you can move forward with it, but there is a chance that from a legal standpoint, you may not even be able to file bankruptcy.

Strange as it may seem, the new bankruptcy laws dictate that you must attend some credit counseling sessions. This is strange because the majority of people who file do not do so due to financial mismanagement, but this is still part of the law, so it is something that you need to plan to do.

This is not something you want to enter into until you have considered all of your other options. The reason for this is because a bankruptcy filing will show up as a huge flag on your credit report for the next seven to ten years, and it will be more difficult for you to get credit cards, personal loans, a mortgage, and even employment with that huge blemish on your credit report.

Having financial obligations is almost a way of life in today’s world. While we cannot accurately forecast what will happen in the future, there are usually options that should be evaluated, and in the financial world, bankruptcy may indeed be the best option. But you need to be aware of the ramifications and ensure that you have checked into all other possible options first.

Tags: credit repair, credit rating, credit card debt

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