If you have reached the end of your rope and you are thinking of bankruptcy there are some basic things that you will need to know before calling a lawyer about your situation.
The United States Constitution allows you to file bankruptcy and is governed by the federal government, but some states have local laws as well pertaining to bankruptcy. The purpose of a bankruptcy to give the person or couple a fresh start and remove the burden or pressure of the debt.
Chapter 7 or liquidation takes the assets and distributes among the creditors. This bankruptcy can take a few months, but once you have signed the papers it is a matter of waiting on the final bankruptcy papers. There is a "means test" in order to qualify for Chapter 7 which basically looks at the individual income based on the amount of debt.
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Chapter 9 or adjustment of debts is a usually saved for cities, towns, school districts and does not pertain to personal bankruptcy.
Chapter 11 or reorganization is usually for companies who want to continue to business, but need to remove some of the burden of the debt or stretch out their payment plan.
Chapter 12 is an adjustment for family farms or even fisherman which will allow the fisherman or farmer to continue running their business and lengthen payments on debts.
Chapter 13 is for individuals with income which will allow the individual to stretch out their debts so it can be repaid. The attorney will come up with a repayment plan and takes it to the court to approve.
There is a form that you can obtain from uscourts.gov called Bankruptcy Basics that can help you understand more about this procedure. And there are official forms that can be purchased http://www.uscourts.gov/bkforms/index.html.
Bankruptcy is not for the faint of heart and having gone through bankruptcy myself I highly recommend legal consults. I visited 2 attorneys before deciding on the right one. Once you file a Chapter 7 this will automatically stop most collection.
Prior to talking to an attorney make a list of the source, amount and frequency of all of your income. Make a list of all of your property, list of your credits with the amount and type of debt, and a list of all of your monthly expenses such as your utilities, food, gas, clothing, shelter, medicine and transportation.
The advantages of Chapter 13 over the liquidation under Chapter 7 are the ability to save your home from foreclosure. This will allow the foreclosure procedures to stop and you will be given the opportunity to cure delinquent payments. Another advantage will be to catch up on your other payments by rescheduling your debt. You will now make payments to the court and he will pay your debts to your creditors. You will from this point on have no more direct contact with creditors and they cannot
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