Are You Considering Filing Bankruptcy?

Are You Considering Filing Bankruptcy?

Are You Considering Filing Bankruptcy?

There was a time when filing a Petition in Bankruptcy was considered a terrible thing, a stigma with which the person filing had to live with. That is not true today. With our economy falling in a downward spiral the only hope of financial redemption can be bankruptcy. Since the Bankruptcy Code is under federal jurisdiction, the procedure for filing bankruptcy is the same in every state, with a few variations allowed in certain cities and states.

There are three options open to you if you are going to file for protection under the Bankruptcy Code: Chapter 7, which is a complete dissolution of your unsecured debts. If you have secured debts (debts covered by a vehicle, house, appliance, etc.) you will not be able to clear those and you will have to reaffirm those debts. The reaffirmation, however, can lower your payments and extend the time for the debt to be paid.

A Chapter 13 bankruptcy is similar to a debt consolidation although unlike the debt consolidation the debtor is protected by the Bankruptcy Court. In a Chapter 13, the debts are all consolidated whether they are secured or unsecured. The secured creditors are paid a larger sum of money than the unsecured creditors, each month, until the debts are paid in full. What will be paid to the creditors each month is based by prorating the amount owed them. The Chapter 11 bankruptcy is usually filed by a business; but it can be filed by an individual if the debt amount reaches a certain amount. A Chapter 11 is like the Chapter 13 in that the debts are all paid over a set time.

If you are considering filing bankruptcy then be aware that there is now a new ruling that is mandatory. This new ruling requires the debtor to attend a credit counseling class before the bankruptcy petition is filed. The debtor must attend a debtor education class after the bankruptcy has been heard but before discharge. Once the debtor has attended both classes and receives a certificate, the bankruptcy discharge will be final.

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