I need to file bankruptcy. What type of bankruptcy should I file

What types of bankruptcy can an individual file

Everyone experiences a financial hardship at one time or another. This is what happens when you’re spouse needs to file bankruptcy? There are steps that must be taken to attain the financial protection being sought.

Types of bankruptcies for individuals

Two types of bankruptcies can be filed by individuals: Chapter 7 and Chapter 13. Chapter 7 is a liquidation of assets to pay creditors and offers relief from any other debts that can be included in the bankruptcy. A Chapter 13 bankruptcy is a reorganization of debt. The debtor creates a payment plan that lasts for a 3-5 year period. Once completed, all creditors are considered paid. It is important to note, that whichever type chosen, the bankruptcy remains on your credit report for a period of 7-10 years, though it’s impact lessens with time.

Determining which type of bankruptcy to file depends on the financial situation of the filer. For example, if the filer is unemployed and cannot afford to pay his creditors, then a Chapter 7 might be his only recourse. But, if the filer is simply behind in payments and needs special arrangements to pay his debts, then a Chapter 13 is a plausible option. Another consideration is a filer’s home. If he wishes to keep his home and can still afford the mortgage payments, a Chapter 13 plan is the only option, because in a Chapter 7, the house is almost always sold to pay creditors.

Collection of Information

The first thing a potential bankruptcy filer needs is a list of everything he owes. The easiest way to do this is to attain a copy of the filer’s credit report. Everyone is entitled to one free report each year, so contact the three main reporting agencies: Experian, TransUnion and Exqifax and request a free report from each of them. A filer can also use a credit report website such as annualcreditreport.com to download a comprehensive credit report.

Once the report is in hand, make a list of all the debts that should be included in the bankruptcy. Some debts that you can include in a bankruptcy are late utility payments, late mortgage payments, car notes, medical bills and credit card accounts. Include all debt — even the accounts that are current. You should also examine any recent letters or notices you have received from creditors, as depending on how recent the debt, it might not be reported on the credit report yet.

Take this report to a bankruptcy attorney and explain your situation. Once he has examined your documents and understands your financial situation, he will be able to give you sound advice on how to proceed, including which type of bankruptcy case to file. Most attorneys that handle bankruptcy cases offer a free consultation and will set up payment arrangements for their fees. You can file a bankruptcy case without an attorney, but this would be ill-advised, since many cases can be complicated, and one mis-step can get the bankruptcy case thrown out of court.

Read, “Understanding chapter 7 bankruptcy exemptions