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Chapter Bankruptcy The Real Deal

Chapter 7 bankruptcy is the most common type that is filed for. When someone is considering personal bankruptcy, Chapter 7 is what they are typically thinking of, even though there are multiple types or chapters, each with its own set of guidelines, requirements, and restrictions. The typical consumer might consider filing bankruptcy when they have a mountain of debt that they cannot ever see themselves getting out from under. This is usually not due to financial mismanagement, but an unexpected change in circumstances, such as a job loss, divorce, high medical bills, and other things that the consumer has no control over. But keep in mind that such a filing does not come automatically or without sacrifice. As opposed to how easy things were in previous years, the new bankruptcy laws make it significantly more difficult.

You cannot, for example, just wake up one morning and decide to file Chapter 7 bankruptcy, and have it done by dinner time. If you miss a step in the mountain of forms being filled out, this will typically put you all the way back to square one to start the process over from the beginning, so it is important that you understand bankruptcy law before you start. The court will look at your financial records in great detail, and then make a ruling. In other words, just because you want to file bankruptcy, the court may not allow it, it needs to be approved. You need to have a good understanding of where all your debts come from. There are some types of debts, such as an IRS lien or student loans that cannot be discharged by filing bankruptcy.

If a large percentage of your overall debt is the type of debts that bankruptcy will not discharge, you have little to gain by filing. Another factor to consider is that a bankruptcy is going to stick out like a sore thumb on your credit reports for the next 7 to 10 years. This can affect your ability to be considered for a new job and open new credit accounts. While you will still be able to get credit, you will need to prove yourself all over again, since you are now considered high risk and the interest rates you will be assessed will be much higher than normal.

Are you really prepared to liquidate or sell off most of your assets? That is a requirement of Chapter 7 bankruptcy and there is no way around that. One option is to consider a different chapter, but then with the other chapter of bankruptcy that is typically used for consumers, your debt is not wiped out, but rather merely reorganized at lower interest rates and lower monthly payments. While this may give you the financial breathing room you need, your debt remains, although your assets are not sold off.

Especially in light of the recent changes in the bankruptcy laws, you are strongly encouraged to work with a qualified bankruptcy attorney when doing this. They can help with the paperwork, advise you as to what to expect, and also outline other possible options and alternatives you may not have thought of. The money spent on an attorney can more than pay for itself in terms of time spent and potentially assets not liquidated.

For more insights and additional information about Chapter 7 Bankruptcy as well as getting a free bankruptcy evaluation from a qualified attorney local to you, please visit our web site at http://www.bankruptcy-data.com

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