Claiming Bankruptcy

Filing for bankruptcy is seen as a solution to end a debt situation and make a fresh start. The most common reasons for bankruptcy are divorce, job loss and medical bills. However, claiming bankruptcy should be a last-ditch decision, since this action stays on your credit report for eight to ten years. It can also cost up to $1,700 in paperwork and court fees. Yes, you can often keep your house and your car, but it will be difficult to buy another car or make any purchase that involves credit.

Your first step is to get a bankruptcy lawyer, who will help you with which bankruptcy you need to file. Chapter 7 is for those who have the court decide what will be discontinued and what will be paid back. Chapter 11 often deals with companies, but can be used by individuals as well, saving you from foreclosure by reorganizing payments. Chapter 13 arranges payback by taking payments from earnings.

Find out about an automatic stay. This stops creditor calls, repossession, and foreclosure. It stops the attempts to collect debts from you. See how you can put together enough money to pay attorneys and court fees. If the court rules that you have the earnings for payback, it can rule against you. Put together a list of your assets and liabilities. This is needed for court, and will also put the whole situation before you in black and white.

Be aware that student loans are never erased by bankruptcy. Seek a solution of consolidating this debt into manageable payments. Finally, file a petition with bankruptcy court. The process from beginning to a decision might take six weeks.