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Start A New Chapter In Your Life - Filing Personal Bankruptcy

As hard as we try to stay ahead of our financial obligations, sometimes our finances are leading us rather than the other way around. As bills pile up and we get farther and farther into debt, we have to stop and ask ourselves how we got there. Sometimes, the fault is our own and sometimes, bad stuff happens to good people. When debts are so deep that exploring other ways to get out of a rut also doesn~t sound like a do-able solution, filing bankruptcy is sometimes the best option for getting a fresh start.

Bankruptcy laws and filing chapters vary by each state. While some states let you keep your assets, others take away everything you own and make you give up ownership. Almost every state does require that your credit history contain information regarding your bankruptcy for at least seven years. Before you can approach a mortgage company or other lender, most institutions won't allow a loan until at least 3 years after the bankruptcy verdict.

The complexities of bankruptcy are outlined in bankruptcy Chapters. Chapter 7 generally cancels (discharges) all financial obligations. However, if a larger debt like a home mortgage can be paid off with collateral, the person must do so or give up the property. According to Chapter 13, your debts are consolidated if you can prove that your monthly income exceeds your monthly living expenses. You then make a payment to the court for the next three to five years. Many Chapter 13 filers end up keeping all of their properties. Chapter 11 and Chapter 12 are other common bankruptcy Chapters that are reserved for restructuring or closing corporations and businesses.

If clearing your debts sounds like such a great way to get rid of expenses, why don~t more people do it? Simply put, it ruins your credit. Bad credit is a curse that follows you for a long period of time. Every time you file for another loan, this plague sits on your credit report waiting to explode like a fireball and destroying any hopes for a loan with great terms. In fact, while many creditors say they~ll help you qualify for a loan even though you have bad credit, these creditors are really saying, "Hey, I~ll give you a loan but you have to pay the highest premiums, over inflated interest rates, and you may even have to take out a second mortgage to pay our additional fees!" As sweet as that might sound, you~d probably be better off passing on those "too good to be true deals" and waiting a few years until your credit history clears or another lender a few years down the road doesn~t find you as big of a risk.

Carefully go over any offer to consolidate your loans and debts. While these offers sometimes combine your troubles into one big sum, you should review how your debts would be paid off. The FTC (Federal Trade Commission) contains numerous reports online about scam debt-counseling services that do little more than make your situation worse. Some counseling firms, however, are much better than filing Chapter 13. The American Bankruptcy Institute at http://www.abiworld.org has great reports and reliable information to help you side step and handle bankruptcy issues.

Philippa Munster is the owner and operator of Bay Bankruptcy which is a useful source for information on bankruptcy on the internet. For more information visit her archive of articles here: http://www.baybankruptcy.com/