Personal Bankruptcy - Online Advice & Information USA

An online information guide to filing personal bankruptcy

Personal bankruptcy can happen to anyone. It doesn't take much; a few too many charges on the credit card, a medical emergency, a sudden job lay-off, and you can land in the red. Even Great Expectations author Charles Dickens was once imprisoned for his debts. And with more and more Americans living paycheck to paycheck everyday, such a situation becomes all too possible.

According to the Federal Judiciary, 1,625,208 people declared personal bankruptcy in 2003 to clear themselves of debt. When considering bankruptcy, ignore the news stories about the mega corporations that bury themselves under mountains of corruption, debt and fraud. Personal bankruptcy works very differently from corporate bankruptcy, allowing individuals more flexibility and choice.

There are two types of personal bankruptcy - the well-known liquidation procedure known as Chapter 7, and the repayment scheme of Chapter 13. Both types are designed to help both the debtor and creditor keep as much money as possible; the difference is in how they go about obtaining it.

Over one million people declared personal bankruptcy by filing Chapter 7 in 2006. Declaring Chapter 7 might be the answer if you:

Need to quickly stop creditors from taking collective action against you. This includes canceling your utilities, evicting you from your home, or repossessing your car.
Want to clear debt quickly, sometimes within four months.
Don't mind losing assets to your creditors
Don't have any monthly disposable income.
Realize you cannot dismiss the case once it has begun, and you cannot change to a Chapter 13.

On the other hand, 467,999 people declared Chapter 13 bankruptcy in 2003. Chapter 13 might suit you better if you:

Prefer to pay off your debt slowly, over three to five years.
Have a regular income that allows you to set aside monthly debt payments to court.
Can stick to a strict budgeting scheme that forces you to put all your disposable income towards your debt.
Believe you might be able to pay off your debt, but still want the option to change to a Chapter 7 if things do not work out.

A third option is to file 'Chapter 20 bankruptcy,' which is when debtors file Chapter 7 and Chapter 13 in order to take advantage of the systems for different types of debt.