"Bankruptcy does not wipe your credit slate clean and give you a fresh start. Bankruptcy should be a
last resort to solving financial problems -- when the mountain of debt is so great and the creditors so
unrelenting that no other accommodation can be reached." - Terry Savage, Award-winning Journalist
Consider these facts:
Bankruptcy stays on your credit report for up to ten years.
You will have difficulty getting future credit such as mortgage loans.
Any credit you get will probably cost you more in terms of interest rates and fees charged. Alimony, child support, and most taxes survive bankruptcy and will still be owed.
Types of Bankruptcy:
There are two types of bankruptcy available to most people, Chapter 7 and Chapter 13.
Chapter 7:
Chapter 7 bankruptcy is referred to as "straight bankruptcy" or "liquidation," because the debtor's
unprotected assets are converted to cash and disbursed to the debtor's creditors to repay part of the
debt owed.
Any person, partnership and most corporations can file Chapter 7.
Chapter 13
Chapter 13 bankruptcy affords the debtor the opportunity to repay all or part of his debts over an
extended time period. This plan requires that the debtor have a consistent income to make future
payments for the duration of the plan.
Chapter 13 is designed for consumers who need relief from their creditors and collection activity to
reorganize their debts and devise a plan to repay them.
The debtor is allowed to keep all of his assets, including those not exempt and not mortgaged. Both types of bankruptcy may get rid of debts where creditors have no specific rights to property, and
may stop foreclosures, repossessions, garnishments, utility shut-offs and debt collection activities.
How to Find an Attorney:
If you need legal advice on filing bankruptcy, here are some basic tips in helping you find an attorney:
Contact your local bar association for a referral. If you can't afford an attorney, contact legal aid services, a university law school with a legal
assistance program, or your local bar association for a referral to an attorney who can help you
free of charge. Look for an attorney who is state-certified or certified in bankruptcy practice.
Alternatives to Bankruptcy:
Think about bankruptcy as a last resort. Here are a number of alternative ways to fix your finances
without risking your credit rating:
Rather than trying to avoid your creditors, talk to them. Let your creditors know that you would like to work out a plan to begin paying off your debt.