Start Out The New Year By Filing For Bankruptcy Bankruptcy Basics

Bankruptcy should always be considered a last resort after all other efforts to recover from your debt problems have failed. The public record will stay with you for 10 years and beyond. Even a bank account application will ask if you ever filed bankruptcy, which you are legally required to answer. New laws are now place which require you to get involved with a valid credit counseling program before you can file anyway, so keep that in mind.
Bankruptcy laws vary from state to state, and everyone's situation is different. There are no absolute answers as to whether this would be a viable option for you. There are many lawyers who offer free consultation and can tell you how to proceed; the costs and pros and cons.
We can, however, clarify the most basic types of bankruptcy used by individuals. Each of these is known by the title of the Chapter of the Federal Bankruptcy Act in which they appear. The most common of these are Chapter 7 and Chapter 13.
Chapter 7 vs. Chapter 13
Chapter 7 bankruptcy is (or has been until new laws took effect) one of the most common types of bankruptcy used by individuals, but may also be used by businesses. Under Chapter 7, a court-appointed trustee collects the individual's assets. The trustee sells the assets for cash and pays the proceeds to the individual's creditors. Assets that are exempt under federal or state law do not have to be liquidated. Once the Chapter 7 process is final, the filing cannot be repeated for six years.
An example of who might file a Chapter 7 would be someone with little property but unable to meet their monthly payment obligations to creditors.
Unsecured debts, except tax and student load debt are forgiven, though there are extenuating circumstances which may apply to all unsecured debts. Creditors cannot contact you during the process or after the debts are discharged.
To qualify, you need to take a "means test" and complete the required pre-filing session with a credit counselor.
Chapter 13 bankruptcy is designed for an individual debtor with a steady source of income. It is generally more costly than filing Chapter 7, because it considerably more complex. Under the Chapter 13 plan, also called "individual reorganization," the debtor must settle his debts over a three to five year period. The debtor is allowed to keep his property. At a confirmation hearing, the court either approves or disapproves the plan. You are protected from debt collection calls and efforts to impose wage garnishment. Also, debts that were not canceled in a Chapter 7 discharge can be reduced in a Chapter 13 payment. Co-signers are also protected under Chapter 13.
To qualify, unsecured debts must be below $360,475 and secured debts less than $1,081,400.
An example of who might file a Chapter 13 would be someone with considerable equity in their home or property which they wish to keep. They're able to keep up with expenses, but are unable to keep up on the scheduled debt payment.
Here is hoping you can find a debt relief program that will work for you to avoid bankruptcy.

As we usher in 2012, the bad financial decisions we made in 2011 will quickly become a lingering memory. Looking back to New Year's one year ago, I remember all the talk of how people were going to get out of debt for their New Year's resolution. One year later, it seems nothing has changed and according to the statistics Americans are going the wrong way. Credit card debt is now at an alarming $15,799 per American. With only 300 million people living in the United States it blows me away to learn that there are over 609 million credit cards held by US consumers. Considering age and ability to pay this would factor down to six credit cards being held per American. Over the last years, all the talk about getting the US debt under control and the US consumers, that control just went out the window. With these new numbers it's obvious that the US is going to see record numbers of Americans filing for bankruptcy. Since the changes to the bankruptcy code back in 2005, at first we saw a drop as expected and from 2006 on the numbers of those filing bankruptcy has continuously risen until 2011 where it went flat. This last year has perplexed many experts because the numbers say bankruptcy filing and yet we will probably finish out the year with 1.5 million bankruptcies filed, a little lower than 2010.
The common consensus from experts and bankruptcy attorneys across the US is this is the calm before the storm. After speaking with a bankruptcy attorney, they informed me of how many people came into their office and were too broke to file for bankruptcy. Now that's being broke. When you factor in all the costs, filing bankruptcy is really not that expensive. The average fee for a bankruptcy attorney to file Chapter 7 is about $1500. Add in the costs of the pre-bankruptcy counseling course and the post-bankruptcy financial management course along with the bankruptcy court fees and individual filing can plan on spending approximately $2000 for the entire procedure. Looking back at the amount of credit card debt the average American has currently, $2000 is really quite a value to wipe this out with no questions asked.