Filing For Individual Bankruptcy

Filing for individual bankruptcy is not an easy thing to do and normally its done as a last resort. In our society, the filing of bankruptcy often brings with it embarrassment and a stigma that can literally destroy the psyche of some. But, there are times when you have no other viable choice than to file for bankruptcy.

When you file for individual bankruptcy in the U.S., you typically are choosing between two distinct types of filings - Chapter 7 or Chapter 13. Based on statistics, most individuals end up filing for Chapter 7 bankruptcy. Under Chapter 7, the court will liquidate certain of their assets and give the money derived from them to the creditors. In return the debt to the creditors will be deemed paid.

If you have a steady job and are pulling in a steady income, you may be better off filing under Chapter 13. The benefit in filing this way is that you can keep your assets. In return, however, you will be required to enter into an agreement with the courts to pay off your debts within, at most, a five year period. With either type of filing, the record of the bankruptcy will end up on your credit report.

Your lawyer will inform you of what you need when you show up for your court date. But normally you'll be required to show evidence of your current assets, income, expenses, and debts (secured and unsecured). This includes things such as income tax statements, utility bills, bank statements, credit card bills, mortgages, and so on. Make sure you bring everything so the court has all the information it needs to make a determination of your case.

When you file for individual bankruptcy, the hope is that you'll get a fresh start by having all of your debts discharged. There are some debts, however, that the courts typically will not discharge. For example, if you have back taxes, it's extremely unlikely that they will be discharged. It's also unlikely that child support debts will be discharged. A good idea is to talk to your lawyer before beginning individual bankruptcy proceedings. After looking over your financial data he will be able to give you a good idea of what debts you will be left with after the bankruptcy goes through.

If the court approves your bankruptcy request, it will determine which of your debts will be discharged and which ones will remain on the books. The court will also notify your creditors of your bankruptcy status. The court will also determine which of your assets you can keep. The assets that you can't keep will be sold or auctioned off to raise money for the creditors. What you can and can't keep varies from state to state. Your bankruptcy lawyer can tell you what the rules are in your individual state.

Deciding to file for bankruptcy is a hard choice to make. Because of the stigma attached to it, many people are deathly afraid of bankruptcy. But, in many cases, it's the best choice to make - both financially and psychologically.

Article Source: http://www.moneyarticlelibrary.com

David Hoyer is a freelance writer who writes articles relating to bankruptcy such as chapter 7 bankruptcy information and buying a new car after bankruptcy . For more of his articles, please visit his site.

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