File Bankruptcy To Discharge Your Debts

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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.

A person filing for individual bankruptcy typically has a choice between Chapter 7 bankruptcy and Chapter 13 bankruptcy. 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.

Assuming that you have a lawyer, he will let you know what documentation you need as well as when and where to show up for your court date. Normally you will have to show proof of your current assets, income, expenses, liabilities, and debts (secured and unsecured). This would include items such as your income tax statements, household utility bills, bank statements, credit card statements, mortgages, and the like. Make sure you bring everything to the court so that it has all the information it needs to make a determination of your case.

When a person files for individual bankruptcy, the big hope is that they will have their major debts discharged. Then they will be able to start almost with a clean slate. In reality, however, there are some debts that the courts normally will not discharge. One example is overdue federal taxes. It is extremely unlikely that they will be discharged. It is also not likely that any child support debts will be discharged. For the best information on the current practices in your area, talk to your lawyer before beginning individual bankruptcy proceedings. Once he has a look at your financial data, he will be able to give you a good idea of what debts you will be left with after the bankruptcy process.

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://depositarticles.com/

David Hoyer is a freelance writer who writes articles relating to bankruptcy such as chapter 7 bankruptcy info and bankruptcy credit reports . For more of his articles, please visit his site.

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