Check Your Options Before Filing Personal Bankruptcy

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.

For personal bankruptcy, you have a choice whether you should file Chapter 7 or Chapter 13 bankruptcy. Each of these methods has different requirements and is used to accomplish different goals, so you need to be aware of which one is best suited to your particular situation.

Many people think that filing personal bankruptcy is just a matter of filling out the right forms and submitting them, but the days when that statement was true are long past. With the recent changes in bankruptcy law, this is no longer a do-it-yourself process, and you may wish to consider getting a good bankruptcy lawyer that can guide you through the maze of forms and paperwork. The money spent on a bankruptcy lawyer can more than pay for itself in time saved and assets not liquidated.

Do you know the various types of debt that you have that is causing you to consider personal bankruptcy? You should make a list of the debts that you have and categorize them, since there are certain kinds of debt that cannot be discharged via bankruptcy. These would include alimony, child support, student loans, and several other kinds of financial obligations. If this type of debt makes up a good percentage of your total indebtedness, bankruptcy is not going to help you.

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.

One of the requirements with the new bankruptcy laws is that the person filing must attend some credit counseling and money management sessions. Yes, this is somewhat strange since the majority of people who file do not do so because of financial mismanagement, but it is still a requirement and something you must plan on doing as part of the entire process.

Interestingly enough, many people have not thoroughly investigated all other possible alternatives to bankruptcy before they start the filing process. You should check out your options, since bankruptcy is a huge step and will leave a large blemish on your credit report for the next seven to ten years, which will make it difficult to get credit cards, loans, even employment when people see that 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.

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Jay Anderson writes financial articles based on his expertise and advises clients about bankruptcy. For more insights and additional information about Personal Bankruptcy as well as getting a free bankruptcy evaluation from a qualified attorney local to you, visit www.bankruptcy-data.com

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