Bankruptcy is a legally declared ability of an individual or organization to pay its creditors. Creditors file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed.

Bankruptcy is something that is life altering and leaves deep wounds both to your emotional well-being and credit report. And it is something that is not usually recommended. You can start of by preventing your self from debt because it is usually seen that the dreams these credit cards gives us can be burst very easily.

There are basically two types of consumer bankruptcy and they are:

Chapter -7

This bankruptcy is also called liquidation bankruptcy. The trustees will make a self appraisal of all your property and will examine all your assets and if there are any assets that are not exempt then they will sell your assets and pay off your debts. And once your known exempt assets are sold and your creditors are paid off then all your unsecured debts will be discharged by the bankruptcy court.

People who usually file for bankruptcy chapter -7 protections are able to keep all their property as they have no non exempt property left. Taking the advice of a legal counselor is the best option as they are fully aware of the legalities. Involved and will find the best possible legal solution to resolve and also to plan a proper strategy.

Chapter -13

This is also known as a wage earners bankruptcy. And this allows you to propose a plan to repay your creditors over time that is usually five years. Your monthly repayment amount will be based according to your monthly disposable income as defined by the bankruptcy court. After you have made payments to the creditors for five years, any unsecured debts will be discharged. Chapter-13 bankruptcy is usually filed by debtors whose assets exceeds the exemption offered by the state law.

But just keep in mind that bankruptcy fraud is a crime  and if the authorities find that there is something fishy about it  you sure can be involved with serious charges. Falsifications on bankruptcy forms often constitute perjury. Concealment of assets, destruction of documents and fraud claims all come under the term crime and you have to face very serious consequences if your involvement is proved.

Prevention is better than cure so get rid of your spending habits that make you go on a wild spree and avoid the extra expense so you don’t end up taking loans. Always remember that one debt leads to another and this goes on and the outcome is always disastrous .

Bankruptcy is a word that sends chills in the whole body. It sure is a living nightmare and tends to break your emotional and financial well-being. It completely destroys your life, your job and your marriage so just avoid it at all cost.

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1. When Filing Bankruptcy, You Should Seek The Consult Of A Bankruptcy Attorney
2. Understanding Bankruptcy to Handle the Process Better
3. United States Bankruptcy Courts
4. Bankruptcy Debt Relief – What You Should Know Before Filing Bankruptcy
5. Bankruptcy Law & Attorneys – Important Facts To Consider