Learning More About Bankruptcy

Recent changes to bankruptcy law may be making it harder for some people to file bankruptcy. Some filers with higher incomes can no longer claim Chapter 7 bankruptcy, but will instead have to repay a portion of their debt under Chapter 13. In addition, all debtors now have to get Credit Counseling before they can file a bankruptcy case along with additional Counseling on budgeting and Debt Management before their debts can be cleared. Also, it is sometimes tougher to find an attorney to represent you in a bankruptcy case because the laws have been changed for them as well. For this reason among many, Debt Help USA provides free information regarding highly sought Bankruptcy Alternatives that can be reviewed at each users convenience.

Chapter 7 bankruptcy is sometimes called "liquidation" bankruptcy. This means it cancels your debts, but you might have to let the bankruptcy court liquidate or sell some of your property for the benefit of your creditors. The whole Chapter 7 bankruptcy process takes about four to six months, costs $299 in filing and administrative fees, and usually requires only one visit to the courthouse. You must also complete credit counseling with an agency approved by the United States Trustee.

Chapter 13 bankruptcy, sometimes called reorganization bankruptcy, is quite different from Chapter 7 bankruptcy. In a Chapter 7 bankruptcy, most of your debts are wiped out; in exchange, you must surrender any property that isn't exempt from seizure by your creditors. In a Chapter 13 bankruptcy, you don't have to hand over any property. However, you must use your income to pay some or all of what you owe to your creditors within three to five years, depending on your current financial situation with debt and income.

As mentioned earlier, before you can file for bankruptcy under either Chapter 7 or Chapter 13, you must complete credit counseling with an agency approved by the United States Trustee's office. Credit counseling ensures you will make an educated decision on whether you really need to file for bankruptcy or whether an informal repayment plan would get you back on your economic feet.