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At first glance, choosing to file personal bankruptcy may seem like an easy choice. If you’re considering filing bankruptcy, then there is good chance you are swimming in debt and see no other way out. Bankruptcy is often a way to get out of creditors and debt collectors from constantly harassing you.

However, when looking to file personal bankruptcy, the question then becomes what type of bankruptcy to file, Chapter 7 or Chapter 13. Each chapter is unique and is intended to be used for very different reasons.

When making the choice to file personal bankruptcy, it is important that you do your homework to make sure that you are choosing the right path for your personal situation. With all of the new bankruptcy laws in place, filing personal bankruptcy is no longer an easy do it yourself job.

Chapter 7 bankruptcy is ideal for someone who is not able to repay any of their debt. If you have lost your job or have no means of income, then you may want to consider filing Chapter 7. However, in order to file Chapter 7, you cannot have had a case dismissed 180 days prior. As well, you must undergo professional credit counseling in order to be eligible for filing personal bankruptcy.

Chapter 7 bankruptcy gives individuals the ability to try and start fresh with no debt. However, in order to obtain this fresh start, your non-exempt assets must be sold off to repay the debt. Also, not all debt is eligible for discharge. Debt such as child support and alimony, student loans or personal injuries cases cannot be included in your personal bankruptcy.

Chapter 13 works a bit differently than Chapter 7 bankruptcy. Unlike Chapter 7, your personal debt is not completely eliminated or discharged through Chapter 13. Instead, a structured repayment plan is set up.

When filing Chapter 13 bankruptcy, you must go through credit counseling previous to the proceedings. Likewise, if you have previously filed bankruptcy 180 days prior and the bankruptcy was discharged for any reason, then you are not eligible to re-file.

One of the main advantages of filing Chapter13 over Chapter 7 is that you can generally save things, such as your home. Unlike Chapter 7, your assets are not sold off to repay your debt. Instead, the debt is simply negotiated with the creditors and the remaining balance is then repaid by you. You simply set up a repayment plan to pay off your debt over a period of time.

Filing personal bankruptcy can be an extremely difficult decision. Therefore, when looking to file bankruptcy, it is important that you have a full understanding of the laws and how they will affect your personal situation.

Bankruptcy can offer you a fresh start if done correct. However, in order to properly file bankruptcy, it is important that you file the appropriate chapter so that you will no longer be drowning in debt. Keep in mind that Chapter 7 and Chapter 13 bankruptcies are very different and should be used for completely different circumstances.

Paul Sarwana offers how to file personal bankruptcy to help debtors build confidence in improving their financial situation. He runs an informational website that provides tips on finding a good bankruptcy lawyer. Get more quality personal bankruptcy information at http://www.debtfirms.com/

Article Author :Paul_Sarwana

Tags: Loans, financial situation, student loan, Bankruptcy, repayment

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Tags: Bankruptcy, filing bankruptcy, financial situation, irs, Loans, Personal Bankruptcy, repayment, student loan