It can happen to the best of us. Perhaps you suffer a prolonged or serious illness and have run up large medical bills or perhaps you are laid off and are forced to use your credit cards to pay the monthly bills. No matter how it happens, you are looking at a debt load that you are unable to pay or are getting more and more behind on each month. If you find yourself in this difficult position, you might want to consider filing for bankruptcy. Personal bankruptcy can be filed either as a Chapter 7 or as Chapter 13. Each are designed to give you a clean slate so that you can build a new life without being hampered by pre-existing debt. Chapter 7 is what most people call to mind when thinking about bankruptcy. At the end of approximately six months, all of your debt is wiped away with just a few exceptions including student loans and taxes. These debts will survive the bankruptcy and you still be required to pay on them. However, Chapter 7 does eliminate debt where people are most likely to be in trouble such as credit cards and medical bills. The debt is simply discharged and you are no longer liable no matter what happens subsequent to your bankruptcy. Unfortunately, not everyone can qualify for Chapter 7. Every six months the state’s median income is reevaluated and your income must fall below this number in order to automatically qualify for Chapter 7. If your income is above the median, you can still qualify by satisfying a secondary test called the means test that involves digging into your financial situation a bit more. Additionally, in order to keep your home or car under Chapter 7, your payments must be current. If you are not able to qualify for Chapter 7 as a result of your higher income or being behind on auto or home payments, you would be forced to file Chapter 13.

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Bankruptcy is the most drastic of all the debt relief methods and one that under no circumstances should be entered into lightly. It is a long term solution to a short term problem and one that carries with it a remarkable amount of serious consequences and ramifications and it is for that precise reason then that it is strongly advised in the most emphatic terms possible that you ensure that you consult with a bankruptcy expert to ascertain whether it is an appropriate method for you. Part of the problem with bankruptcy is that consumers who are struggling with a mountain of debt become somewhat seduced by the very idea of being debt free, or at the very least nearly debt free. There can be no denying that yes, the main purpose of the legal process of bankruptcy is that when it is utilized it will mean that all unsecured debts owed by the debtor will no longer be repayable, they are “forgiven”. However, there are a number of different types of debts that are NOT forgiven under bankruptcy proceedings meaning that you will have to find an alternate solution to your problems. Currently there are two types of bankruptcy: Chapter 7 and 13 bankruptcy proceedings and each of these different forms are implemented in a very different manner and with different consequences for the debtor. They say that a little bit of knowledge can be a dangerous thing and in context of bankruptcy proceedings, this is a fairly perceptive comment to make. A major, downright deadly mistake that consumers make is that they side with a Chapter 13 bankruptcy policy because it means that the bankruptcy will remain on their record for a period of seven as opposed to ten years.

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