Family Finances

Bankruptcy- What You Need to Know

If the debt is beyond solving with any of the listed methods bankruptcy may be a viable option. There ar two types of bankruptcy for individuals, Chapter 13 and Chapter 7. Chapter 7 is full bankruptcy where most bills are " wiped out" by a federal bankruptcy court. Usual exemptions -- exclusions include cars, work tools and basic household furnishings. Property may need to be sold by a court appointed bankruptcy trustee-or returned to creditors. You can discharge your debts under Chapter 7 only once every six years

Chapter 7 bankruptcy most often doesn't let you keep property when you have an unpaid mortgage or lien against it. Chapter 13 is partial bankruptcy, where your bills are placed with a court trustee to whom you make payments, these payments are than spread out among you creditors to pay them off within 5 years. You get to keep property such as house and car.

Chapter 13 and Chapter 7 Bankruptcy both get rid of unsecured debts ( howeer, the new bankruptcy law retains your responsibility to pay credit card an other unsecured debts incurred with 12 months of the bankrupty filing). They both stop foreclosures, repossessions, garnishments, utility shut offs, and other debt collection actions against you. Both have provisions which allow you to keep certain assets, although exemption amounts vary. Personal bankruptcy does not wipe out child support, alimony, court fines and fees, taxes, and some student loan obligations.

Federal bankruptcy court filing fees are $185 for Chapter 13 and $200 for Chapter 7. You have to pay an attorney additional fess. Shop around to find an attorney with reasonable fees and one with whom you feel comfortable. See Hiring an Attorney-Lawyer- What you need to know -- for more information.