Personal Bankruptcy
[The article below relates to the position in the USA, but, nevertheless, if you live in the UK... please use the link to the website which is at the bottom of the article. You will find some extremely useful links available there.]
The Article follows.......
Personal Bankruptcy The Basics
If youre drowning in debt and creditors have your phone
ringing off the hook, personal bankruptcy might seem the
only way out. Indeed, for people whose debts dwarf their
ability to pay, declaring bankruptcy can be a fast way to
gain a fresh financial start. There are two types of
bankruptcy petitions you can file: Chapter 7 and Chapter
13. Each of these have a different purpose and different
set of circumstances attached.
Property exempt from liquidation during a Chapter 7
bankruptcy includes vehicles worth less than $1500,
clothing, tools of your trade, most household furnishing and
goods and some jewelry. You may also retain up to $18,450
worth of equity in your home. Though declaring a Chapter 7
bankruptcy will discharge you from most of your debts, there
are certain debts that are not covered. These include child
support or alimony payments, most student loans, recent tax
bills or debts owed to creditors with whom youve been
dishonest in the past.
Chapter 13 bankruptcy serves not to discharge you from your
debts but rather to reorganize them and repay them within
three to five years. This option is preferable for people
with property and assets they want to keep and/or a
predictable source of income allowing them to repay their
debts and maintain a standard of living. This type of
bankruptcy allows the debtor to keep their property and file
a repayment schedule with the court. If you file for Chapter
7 bankruptcy but a judge deems you fit to pay, you may be
forced to re-file under Chapter 13. This could happen for
any number of reasons, from assessment of your income to the
value of your property.
Once youve filed for bankruptcy, by law your creditors must
cease and desist from any action against you regarding your
debts. This includes phone calls, letters, lawsuits and
wage garnishing. You should be careful to consider any co-
debtors in your decision about whether or not to file for
bankruptcy. If your creditors cannot collect from you, they
will go after anyone who has co-signed a loan with you.
No matter how you slice it, filing for bankruptcy will do
damage to your credit rating. However, most people who file
for bankruptcy already have poor credit ratings that are
unlikely to get much worse from declaring bankruptcy. Your
bankruptcy will be listed in your credit report for ten
years after the date of filing. Ultimately, the opportunity
to make a fresh start by wiping out existing debts and
rebuilding credit is often preferable. Before making the
decision to file for bankruptcy, it is a good idea to talk
with a lawyer, financial advisor or credit counselor to
ensure you are making the right decision for your long-term
financial future.
Samantha Bainer is the webmaster of
Aol Bankruptcy
which is an excellent resource for bankruptcy
For more information go to:
http://www.aolbankruptcy.com/
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