In today’s unstable economic climate, more and more people are desperate to reduce their debt. Some take on second or third jobs or start selling off possessions. Others are downgrading their automobiles or their homes, if they are able. However, because of rising credit card interest rates and double-digit unemployment, many are finding it just about impossible to make ends meet. Filing for bankruptcy actually might be quite a viable alternative for many.

For most, there are two types of bankruptcy which may provide relief. Chapter 7 bankruptcy is the first of these, it is also known as a liquidation bankruptcy. The second is a Chapter 13 bankruptcy which usually involves making significantly reduced payments to settle your debt.

Chapter 7 bankruptcy is desirable because it eliminates all of a consumer’s debt. Unfortunately, this type of relief is the most difficult to obtain because of new Congressional restraints. In this process, a US Trustee is initially assigned to your case to make sure that creditors are protected. Your credits will therefore receive as much reimbursement as possible from the debtor’s bankruptcy estate. When you file a bankruptcy petition, the composition of your bankruptcy estate is determined.

Some think a Chapter 13 bankruptcy is less desirable because it involves making payments. By going this route, you can often achieve fair relief. A US Trustee will often be involved in this proceeding as well. The Trustee’s job in this case, is to actually make sure the creditors get their payments. The actual amount you will pay will be determined by the IRS National Standards. The determining factors and formulas for reaching a decision as to what your payments will be are quite complex.

It is usually somewhere between 36 and 60 months that you will make these payments. If you make all your payments, your should be deemed relieved at the end of the process. However, you must be careful, because if you miss even one payment, the bankruptcy case can be dismissed and the whole collection process can begin again.

If you are in a situation where you think that filing for bankruptcy might be your best solution, you should enlist the assistance of a law firm who specializes in this area. Your legal representative at the firm will help you determine if bankruptcy is a good solution for you, and if so, what type. If Chapter 13 is deemed best for you, they will then review the payment amount you agree to. It is simply not prudent to agree to a Chapter 13 bankruptcy unless you can be sure that the amount of your payments is exactly what it should be.

Filing for bankruptcy is obviously a big decision and a process that is quite complicated. There is a myriad of red tape to follow once you are involved in the process. You will need to fill out numerous forms. Finally, you will have to provide an incredible amount of financial data. Hiring an experienced professional to guide you along this journey is critical – your future financial health depends on it.

Author Bio: For more information about Mr. Darrin Mish and bankruptcy and whether it’s right for you, visit Cleveland Bankruptcy

Category: Legal
Keywords: bankruptcy,bankruptcy exemptions,bankruptcy claim,chapter 13,chapter 7