For many Americans, bankruptcy is the epitome of failure. Even when it was easy to file for bankruptcy, most people attempted to dig themselves out of their financial hole and considered bankruptcy to be their last resort.



If you are considering bankruptcy, it's important to research your options. Currently, there are six types of bankruptcy chapters including: Chapter 7, 9, 11, 12, 13 and 15. The most common include Chapters 7 and 13.

With Chapter 7 bankruptcy, individuals must surrender their non-exempt property to a Bankruptcy Trustee. The trustee sells the property to pay outstanding debts to creditors. Chapter 13 bankruptcy allows individuals to keep their property. However, a repayment plan must be devised and presented to a Bankruptcy Judge.

Whenever possible, attempt to work out a repayment arrangement with your creditors before filing bankruptcy. In today's current state of affairs, many creditors are willing to offer options to help you get back on track. Occasionally, they will accept a lesser amount than is owed on the debt or lower payments by extending the repayment schedule. You'll improve your chances for negotiation if you are able to offer an upfront payment or a reasonable repayment proposal. If creditors are unwilling to negotiate, you may have no choice but to file bankruptcy.

It's important to note that in 2005 bankruptcy laws underwent significant changes. Many individuals were abusing the system and filing bankruptcy because they were careless with their finances or racked up enormous credit card debt. Today, it is more challenging for individuals to file bankruptcy. Therefore, it's important to organize your records and present documentation proving your need for financial relief.

Filing bankruptcy does not mean you will be able to walk away free and clear. The Bankruptcy Abuse Prevention and Consumer Protection Act states, "Americans who have the ability to pay will be required to pay back at least a portion of their debts." Additionally, the BAPCPA states individuals must wait eight years from the date of their last bankruptcy before they can file again.

While bankruptcy is sanctioned under U.S. Federal laws and governed by bankruptcy courts, filings are highly dependent on State law. If you are planning to file bankruptcy, you will be required to adhere to the bankruptcy laws of your state.

If bankruptcy is your only option, consult with an attorney who is well-versed in bankruptcy laws. While you can file bankruptcy on your own, it is a complex and complicated matter that can be overwhelming to most people. A lawyer can efficiently handle your bankruptcy case and ensure proper documents are filed. Having a bankruptcy attorney by your side can provide you with a better chance of having the court approve your request.

Although bankruptcy may not be the choice you prefer, it can clear your slate and offer a new beginning. If you've been careless with your finances, now is the time to thoroughly investigate where you have problems and discover solutions to prevent this from occurring again in the future.