Things You Need To Know About Bankruptcy

Have bills pilling up and do not know what to do about them?  If so you may be one of the many, many Americans who have considered bankruptcy.  There are some things you should know if you are thinking that bankruptcy is what you want to do.
The first is that there is more than one type of bankruptcy.  You have to know what kind you can file for.  Not all forms of bankruptcy are the same; therefore not everyone can file for every kind.  The first kind that is available to individuals is chapter 7.  This kind of bankruptcy is a liquidation designed for those who are going through financial hardships and do not have the ability to pay back the debts that they have.  The second type of bankruptcy that an individual can file for is chapter 13.  This kind of bankruptcy is a repayment plan that is designed for those who have a steady income but do not have the ability to pay their debts at the moment.  So before you decide to apply for bankruptcy you need to know which chapter you will file.
You also need to know the steps involved in filing for bankruptcy.  The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was created to keep people who do not really need to file for bankruptcy from abusing the ability to.  This act has put together steps to make sure that all who are filing for bankruptcy are people who truly need it.  The first step this act has you do is to get a bankruptcy counseling certificate, to prove that you have been educated on the process of bankruptcy. Everyone who files for bankruptcy must get a bankruptcy education certificate.  This is a requirement of filing for bankruptcy; you will need to take a personal financial management class.
The next thing you need to know is how long this bankruptcy will affect you.  Bankruptcy will affect your credit score. Chapter 7 bankruptcy for example will stay on your credit report for about ten years.  You need to know not only how long it will affect you but also how it will affect you in general.  This is where the personal financial management education is helpful.  It will help you to understand what is going to happen once you have filed for bankruptcy.
Bankruptcy is not the right choice for everyone.  There is a lot that you need to know prior to deciding that you should file for it.  Talk with a financial planner; they can help you to find out if you can make it without filing for bankruptcy or whether it may be the best idea for you.  They have a lot of information and it never hurts to learn a little more before you make a decision.

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