Understanding Bankruptcy for You

If you are considering filing for bankruptcy, you are not alone. In the state of Michigan there were over 56,000 bankruptcy filings in 2011 alone. Statistics also show that 1 in 70 households files for bankruptcy. If you are struggling a great deal financially, you will want to look into a great bankruptcy lawyer who can answer all your question about how to recover from this rough time.

Around 450 BC, Roman creditors were given strict power over their debtors. They could either sell the debtor into slavery or kill them. Thankfully, our modern society has better ways of handling someones misfortunes. However, if you do fall too far into debt, you could be facing liens on your assets and wage garnishment. These civil judgments can be stopped by filing bankruptcy.

Your bankruptcy attorney will explain to you that you may qualify for one of a few different types of bankruptcy. Unless you are a business or corporation, you will not be filing Chapter 11 bankruptcy. This leaves you the choice of filing chapter 7 bankruptcy or filing chapter 13 bankruptcy. Your lawyer will have you fill out some forms to see which chapter your qualify for.

If you are facing large amounts of debt, and have little money to even pay your monthly bills, you may be able to file under chapter 7. You will have to pass a means test to show you are struggling this much. You also are likely to already have very few assets, but the ones you do have will be liquidated during the process. Once your assets have been liquidated and put toward your debt, the rest of your unsecured debt will be discharged. This will prevent any wage garnishments and harassing phone calls from creditors.

If you are paying your regular bills with little trouble, but cannot keep up with past debt payments, you may be eligible to file chapter 13. Chapter 13 laws also allow you to keep assets such as your home and your car. Instead of liquidation, this is more of a reorganization of your debt. The courts will consolidate your debts and you will pay a monthly fee to the court trustee. This chapter of bankruptcy typically lasts 3 to 5 years. However, you will also avoid wage garnishments, harassing phone calls, nasty letters, and so on.

No matter what chapter you decide to file, you will want to have an experienced lawyer at your side. The cost up front will be worth making sure all of the paperwork is filed correctly and on time. Your bankruptcy is a lot more likely to be approved with a professional supporting you. Read plenty of online reviews and case studies to make sure you have chosen the most reliable and cost effective lawyer on the market. Once you get through this process, you will be on the road to financial recovery.
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