• Find This Online
• Bankruptcy Information
• Contact Us
• 

Enter your search terms Submit search form

Navigating the Rocky Shores of Bankruptcy

So, you're thinking about declaring bankruptcy? Although popular as a solution to our "buy now-pay later" culture, bankruptcy is not always the best solution. Designed in 1978, the United States law outlining bankruptcy is intended to offer some protection to people who have reached the point where they cannot possibly pay off all the money they currently owe. Here are a couple of things to consider before you make the decision to file:

1 Is the majority of my debt in things like credit cards and unsecured loans, or is it other things like child support and taxes? Declaring bankruptcy can help with credit card and loan debt, but not with things like alimony and IRS back taxes.

2 Am I prepared to accept the consequences of this action for years to come, i.e. damaged credit when applying for things like home loans and even future credit card applications?

If you've answered the questions above and still feel like bankruptcy is your best option, there are basically two options for individual consumers: Chapter 7 or Chapter 13, under U.S. Bankruptcy Code.

3 Chapter 7 involves selling off all or part of your property as a way to pay off outstanding debts immediately. Some or even most of your assets may be exempt, however, so it doesn't necessarily mean you are left with nothing.

4 Chapter 13 involves working out terms with your creditors whereby you can pay back the debts within 5 years with less or no interest. Obviously, this option would require a steady income of some sort.

Although it is possible to file bankruptcy yourself, most people will want to contact a lawyer, for the simple reason that they have done this before, and you have not. A second reason for using a lawyer is that what is exempt from creditors under bankruptcy law can vary from state to state, and can therefore be very confusing. Your lawyer will help you to file a "voluntary petition,"-which means that you are choosing to file bankruptcy yourself, rather than being taken to court by your creditors. A trustee will then be assigned to you by the court, to assist in collecting accurate information about the state of your finances and assets. Following this you and your lawyer will begin to meet with all your creditors and their lawyers.

Ultimately, however, anyone who files for bankruptcy must ask themselves some hard questions about the behavior that got them into so much debt in the first place. What lifestyle changes need to take place in order to ensure that you don't have to file for bankruptcy again in the future? What kinds of things are you looking at as "needs" that are really "wants," without which you would be perfectly happy? Have you been spending money that you don't have as a way of avoiding dealing with some other issues your life? These are the kinds of questions a bankruptcy attorney won't necessarily ask you, but need to be asked nonetheless.

About the Author
Caleb Anderson invites you to visit Find This Online an online resource guide that offers a variety of articles written on different subjects. Browse through plenty of useful articles, information, content and resources on the subject. Visit us Here for more articles on bankruptcy.