About Bankruptcy

There are basically two types of bankruptcy that a person can file in order to excuse their debt from a creditor. They are a Chapter 7 bankruptcy and a Chapter 13 bankruptcy.

In a Chapter 7 bankruptcy you are asking the court to completely eliminate all of your unsecured debt.

What are the advantages of filing a Chapter 7 bankruptcy?
If you elect to hire an attorney, take the required classes on personal finances and file for a Chapter 7 bankruptcy:

• Your wages will stop being garnished, if your creditors have started doing so.
• You may be able to remove some of the liens that have been placed against your property.
• All collections from creditors or collection agencies will cease.

What are the disadvantages of filing a Chapter 7 bankruptcy?
The biggest disadvantage of filing for Chapter 7 bankruptcy is the stain on your credit report for the next ten (10) years. Anything you do over that time period, such as applying for a job, applying for credit again, or buying a home will require to you to bring up the wreckage of your past. You will have to explain to each employer and/or new creditor why you had to do this. It can be very depressing and demoralizing. Other disadvantages include:

• Insurance companies have the right to raise your premiums as you will be considered a "higher risk" than other people.
• The entire bankruptcy process is open to the public and can be very intrusive.
• It can take several months before your case is even resolved.
• In 2005 the bankruptcy laws were changed in favor of the credit card companies making it more difficult to file for Chapter 7 bankruptcy.
• Employers can legally refuse to hire you if you have a bankruptcy on your record.
• The stigma of a bankruptcy on your credit report for 10 years can be overpowering.