Bankruptcy
If you have accumulated so much debt and have so many creditors hounding you for payment that you see no escape, you might have to consider the last resort: bankruptcy. Filing a bankruptcy has a major drawback because it hurt your credit record for 7 to 10 years and will impair your ability to obtain credit in the future. Hence, the bankruptcy declaring decision should not be taken lightly. Always look for other potential alternatives to resolve your debt issue and only choose for filing a bankruptcy if there really a no way out of your debt.
The main advantage of filing bankruptcy is that you obtain fast debt relief from any of your debts. Depending on which form of bankruptcy you choose and the laws in your state, you may get to keep some or most of your assets. For example, some states allow you to keep your clothes and a car, while other states permit you to retain your home, car and other assets. Not all you debts will be discharged. You have to continue pay taxes, child support and student loans.
Two basic forms of bankruptcy exist: Chapter 13 and Chapter 7. Under Chapter 7 bankruptcy filing, the possessions that you are not allowed to keep may be converted to cash, which is then distributed to your creditors. Your bankruptcy is then discharged and creditors can no longer try to collect payment from you. Most people will choose to file under Chapter 13 bankruptcy which you are allow to discharge a large part of you debt, and it allows you to pay whatever debt is left over at a reasonable pace if you earn a regular income. It can be stretched out to five years, if the court agrees. You get to keep more of your assets under a Chapter 13 filing that you do under Chapter 7.
Other types of bankruptcy filing are Chapter 11 and Chapter 12. Chapter 12 bankruptcy is a special type of bankruptcy for family farmers, and Chapter 11 applies to corporations.
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