Bankruptcy
If you're really overwhelmed by your debts and haven't found a satisfactory solution by more traditional method, then you should consider declaring bankruptcy. Declaring personal bankruptcy is a major decision with plenty of pros and cons. On the plus side, it can allow you to have your debt cleared after you complete the bankruptcy process (which can take years depending on which type of bankruptcy you follow). However, depending on your situation, you risk losing some of your assets (including your home) and the bankruptcy will show up in your credit report for up to ten years.
Bankruptcy law varies state to state, so you'll want to get professional advice from a local lawyer.
We'd suggest the following steps
Research - Read the links below to get a better basic understanding of personal bankruptcy.Talk to a credit counselor - Make sure that you'll investigated more traditional ways of getting out of debt.
Talk to a lawyer in your state - Find a local lawyer who specializes in personal bankruptcy. Have an informational meeting to get his thoughts on your situation. Don't make an immediate decision.
Run the numbers - If you are considering a debt consolidation versus a bankruptcy, calculate the expected costs of each (including all fees) to help you make a decision.
There are two basic types of personal bankruptcies: Chapter 7 and Chapter 13. Here is a quick summary of each.
Chapter 7
Chapter 7 Bankruptcy is a process where most of your debts (other than taxes) will be canceled by the court. However, you can lose property that the court decides to sell.
Chapter 13
Chapter 13 Bankruptcy is a process where you file a repayment plan with the court. The plan will typically agree to pay off what you can over 3-5 years. If the court accepts the plan and you follow it properly, then the balance of debts will be canceled by the court. Your creditors can object to your proposed plan and have the opportunity to raise these objections. Your property is generally protected in this situation - unless the court convinces you to include it in your payment plan.
Where can I get more information?
Please take a look at the links below.
External Links
Please note: This website is designed to provide you with information about debt problems. However, this information should not be relied upon. The information does not constitute professional or legal advice. We also cannot take responsibility for content on sites that are linked to from our pages. Always obtain proper legal and other professional advice before undertaking any significant action.
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