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Article By: JayAnderson
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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.
You should gain an understanding of what options are available to you. For personal bankruptcy, you can either file Chapter 7 or Chapter 13, each of which is a slightly different approach. Each method works differently and the right method to use is based on your specific situation, and is dependant on a large variety of factors.
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.
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.
It may seem that personal bankruptcy is an outstanding method to just wipe your financial slate clean and start over, it really is not as simple as that. It can take months for your bankruptcy to be approved, regardless of whether Chapter 7 or Chapter 13 is the better method for you to use. In addition, a federal bankruptcy judge needs to approve your filing, and there is a chance that you will not even be able to file, since bankruptcy is no longer automatically approved as it once was.
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.
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.
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About the Author
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 http://www.bankruptcy-data.com
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