Filing bankruptcy is a difficult decision; having its advantages as well as consequences that need to be evaluated cautiously. Before opting to use bankruptcy as a method of managing your debt, it is critical that you educate yourself about the process as much as you can, particularly because of the new laws and regulations.

What is Bankruptcy? How Does it Work?
Bankruptcy is a method for dealing with debt that you are no longer able to pay in which the debt is resolved by the federal court system, usually via an initial selling off of belongings/assets, which are then divided amongst creditors and lenders, paying off only a fraction of the debts and annulling the remaining amount or by reorganizing or reducing the debt and putting in motion a plan for repayment. The most common types of personal bankruptcies filed are Chapter 13 and Chapter 7. In short, with a Chapter 7 bankruptcy, the assets with the exception of a few basic assets that are protected by law are sold and the money gets divided amongst your creditors, who consent to a reduced amount with the philosophy that the recovery of something is better than nothing. During a Chapter 13, the court helps in the restructuring of the debts with a repayment plan developed after means and income are accessed and proved. Typically, a Chapter 13 is set for three to five years. The advantage of this type of bankruptcy filing is that is very possible for you to retain your property. Then, the left over debt is wiped-out and the debtor is no longer liable for the outstanding amounts that are owed. It is important to note that certain debts, like child support can not be eliminated with via any type of bankruptcy. Get more info about non-dischargeable debts.

Am I eligible?
There have been recent changes by the government that significantly impact the bankruptcy filing process as well as the types of personal bankruptcy filings that you may be eligible for. The income requirements and guidelines have become much more strict. For example, individuals that may have been eligible for eliminating debt by means of a Chapter 7 are now only able to file for Chapter 13 bankruptcy. In addition, enrolling in a credit counseling program is now one of the pre-filing requirements.

Filing bankruptcy has some pretty significant impact on your credit. So, utilizing a credit counseling program is good, and can provide an appealing substitute to filing for bankruptcy. Credit counselors will assist you in negotiating the reduction of interest rates with your creditors, which in turn will reduce the total amount of debt you owe. They will also help you establish a repayment plan that will be suitable to the lenders and within your budget. However, be cautious of paying too much for credit counseling, as many institutions offer such services free-of-charge and much of the results that a credit counseling service can provide, with a little comprehension and faith, you can do yourself. We offer free consultations to those considering filing credit counseling for help avoiding bankruptcy. LEARN MORE!

When it comes time to select a resolution for your debt, it always a wise decision to study your available options diligently as well as what bankruptcy alternatives you have. As mentioned, because of the new laws, filing bankruptcy is not as easy as it once was. In some instances, filing bankruptcy may be the best idea and can offer substantial protection of your assets as you begin your path of a more stable, healthy future. If you are interested in receiving a free consultation for filing bankruptcy, please visit Total Attorneys.

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