All the information you need to make an educated decision
Bankruptcy Options
Bankruptcy can be a great alternative for individuals and businesses in desperate need of financial relief. Filing can provide borrowers with clean financial slates either by discharging debt so that the one no longer is liable for its repayment, or by instituting a realistic repayment plan under the discretion of the bankruptcy court. These opportunities, of course, come with some costs, and it is imperative that filers turn to bankruptcy only as a last resort.
Filing bankruptcy is a very serious move, and you must consider your options in comparison to your financial future. Bankruptcy will be listed on your credit reports for ten years (three years more than more than most negative items), it may affect your ability to get credit or loans, and it may affect your ability to file bankruptcy in the future.
If bankruptcy truly is the only choice for your situation (and certainly there are situations that qualify), then you should decide with a bankruptcy professional which type of bankruptcy is best for you. There are two main types: liquidation and reorganization.
Liquidation bankruptcy results in a discharge of debt so that the filer no longer is liable for repayment. Property of the filer is "liquidated" and then sold, to pay off as much of his or her unsecured debt as possible. Debts that remain after the liquidation generally are discharged.
The goal of reorganization bankruptcy, on the other hand, is to rid oneself of debt by following a court-ordered repayment plan to creditors. Depending on income and debt load among other financial factors, any number of one's creditors may receive payment in full, partial payment, or no payment at all. Debts left unpaid generally are discharged.
There are four common forms of bankruptcy filings: Chapter 7 (liquidation for individuals and businesses), Chapter 13 (reorganization for individuals), Chapter 11 (reorganization for individuals and businesses), and Chapter 12 (reorganization reserved for individuals in the farming and fishing industries).
No matter which form you choose, it is important to understand what bankruptcy can - and cannot - do for you. It is very good for getting rid of credit card debt, for example, but some debts are considered almost obligatory, and therefore very rarely are discharged. Tax debts, federal student loans, child support, and spousal support all are such debts. If your debt load is comprised of such elements, look for an alternative to bankruptcy.
Your Credit Rights After Bankruptcy: Discharged Debts and Zero Balances
Rebuilding your credit should be at the top of your priorities after filing for personal bankruptcy. During this process, keep a close eye on your credit report as items can often be reported incorrectly by the credit reporting agencies. In general, all discharged debts should be reported as zero balances after bankruptcy. Often they are reported incorrectly and can end up hurting your credit more than necessary. To avoid these mistakes, understand your credit rights as a consumer even under the stain of bankruptcy.
What Happens to Cosigners When You File For Bankruptcy?Bankruptcy is a very powerful financial tool that can affect the lives of those surrounding the debtor. Cosigners of debt should pay special attention as they are often not protected by someone else's bankruptcy.
Chapter 7 and Chapter 13 Bankruptcy--Which is Right for You?Chapter 7 and Chapter 13 filings each have their own advantages, but determining which might be best for you will depend on your current financial position.
Bankruptcy and Marriage: 6 Things You Need to KnowBankruptcy is a convoluted process on its own, but involving a spouse could complicate things even further. Whether you are the one contemplating bankruptcy or your spouse is planning to file, it is important to understand how bankruptcy affects the ones around you. While it is legal for spouses to file independently or jointly together, these are six common issues that you are likely to encounter and should be aware of before filing for bankruptcy
Avoid Having Your Bankruptcy Case Dismissed: 8 TipsThe dismissal of your bankruptcy case essentially means it gets thrown out of the bankruptcy court. Once this happens, you lose the protections of bankruptcy, such as the automatic stay, and can then be held responsible for all of your remaining debts.
A New Beginning after Bankruptcy: Part II
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