Can Bankruptcy Help Me Gain Control Over My Life Again?

We try to plan our lives and budgets as best as we can, but things do not always go according to plan. Whether your problem stems from the loss of a job, illness, a car accident, a business gone awry or a divorce, mounting debt is a serious problem facing many Americans today. In fact, today, single women make up the majority of personal bankruptcy filers. Thus, if your debt is out of control, it is important for you to understand that bankruptcy may be the answer you are seeking.

Although no one likes to file for bankruptcy, in many instances it is the best option. Generally, a bankruptcy filing will wipe out all of your credit card debt and other unsecured loans or judgments. With those debts gone, most people are able to maintain their other on-going expenses such as rent or mortgage payments, utilities and car payments. The bankruptcy will not discharge child support or alimony payments, student loans and recent taxes. Most individuals will qualify for either a chapter 7 or chapter 13 bankruptcy.

A chapter 7 is a straight liquidation, but you are allowed to keep a limited amount of property. For instance, if you own a home, you can keep it if you have equity of less than approximately $18,000 per debtor/owner (double if for a husband and wife). You can also keep a relatively generous amount of value in clothing, furniture, cars, and other items. In most chapter 7 cases, the Debtor does not own anything beyond what can be protected. As such, Chapter 7 is often the best solution for someone with a lot of debt and very little assets.

A chapter 13 is an individual repayment plan. It allows a Debtor to pay her creditors over time. A chapter 13 is a good solution for someone who is behind on her mortgage payments, or taxes, or car payments. It gives her time to catch up on these arrears over time and keep her car or home. The Debtor, however, must be able to keep current on the new monthly payments.

The new bankruptcy law, which became effective in October 2005, requires pre-bankruptcy credit counseling and imposes additional filing guidelines. If you think bankruptcy may be an option for you, consult with an attorney today. Waiting until the last minute may prevent you from getting the relief you need.