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If you are considering filing for Bankruptcy, you are not alone...

For many individuals, filing for bankruptcy relief can provide a way out of debt and a fresh financial start. But whether or not a bankruptcy filing is in your best interest depends on many factors and your individual circumstances. Read on to learn more about what to consider if you are thinking about filing a voluntary personal Chapter 7 or Chapter 13 bankruptcy.

Our mission at Bankrupt 101 is to provide our visitors with the basic and important information about the bankruptcy process, and the best software to prepare their petition. Their are numerous forms in the bankruptcy petition package. Unlike the forms you can find on the internet, our smart official pro se form packets include all of the required official forms, can be easily completed on your computer, remembers information you previously entered and does all of the math for you.

bankruptcy petition basicsIn general, it is a good idea to evaluate all of your options before deciding to file for bankruptcy. Before you file your case, think about the types of debt you have and the goals you want to achieve by filing for bankruptcy. A bankruptcy discharge doesn’t eliminate certain types of debt (these are called  priority obligations). This means that filing for bankruptcy may not be in your best interest if all you want to do is wipe out debts that can’t be discharged in bankruptcy.

In addition, many creditors are willing to work with debtors to settle their debts. If you can afford to resolve your debts outside of bankruptcy, you may not need to file for bankruptcy.

There are six types of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code:

    Chapter 7: basic liquidation for individuals and businesses; also known as straight bankruptcy; it is the simplest and quickest form of bankruptcy available;


    Chapter 9: municipal bankruptcy; a federal mechanism for the resolution of municipal debts;


    Chapter 11: rehabilitation or reorganization, used primarily by business debtors, but sometimes by individuals with substantial debts and assets; known as corporate bankruptcy, it is a form of corporate financial reorganisation which typically allows companies to continue to function while they follow debt repayment plans;


    Chapter 12: rehabilitation for family farmers and fishermen;


    Chapter 13: rehabilitation with a payment plan for individuals with a regular source of income; enables individuals with regular income to develop a plan to repay all or part of their debts; also known as Wage Earner Bankruptcy;


   Chapter 15: ancillary and other international cases; provides a mechanism for dealing with bankruptcy debtors and helps foreign debtors to clear debts.

For the purposes of this tutorial, we will be discussing Chapter 7 and Chapter 13 only, as they pertain to the average individual.

The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. Whether a person qualifies for Chapter 7 or Chapter 13 is in part determined by income. As much as 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases. Corporations and other business forms file under Chapter 7. Often called "straight bankruptcy" or "simple bankruptcy," it allows consumers to eliminate just about all of their debts over a period of three or four months. Typically, the only debts that survive a Chapter 7 are student loans, child support obligations, some tax bills and criminal fines. Credit cards, pay day loans, personal loans, medical bills, and just about all other bills are discharged.

Eighty-seven percent of U.S. individuals who enter bankruptcy hire an attorney to file their Chapter 7 petitions. The typical cost of an attorney is $1,170.00. Alternatives to filing with an attorney are: filing pro se  (meaning you), hiring a non-lawyer petition preparer, or pay a relatively small fee to down-load software to generate and complete the petition yourself.   Which questions why are  you filing for Bankruptcy when you can afford a lawyer?

Although bankruptcy eliminates some debt, it doesn't eliminate all types of debt. Before you file for bankruptcy, make sure you know which debts will be wiped out and which will remain. For the most part, you can get rid of credit card debt through Chapter 7 and Chapter 13 bankruptcy. But you may not be able to eliminate other types of debt, including child support, alimony, most tax debts, student loans, and secured debts. In some situations, Chapter 13 can help, whereas Chapter 7 cannot.

Here's what bankruptcy cannot do for you:

Prevent a secured creditor from repossessing property. A bankruptcy discharge eliminates debts, but it does not eliminate liens. So, if you have a secured debt (a debt where the creditor has a lien on your property and can repossess it if you don't pay the debt), bankruptcy can eliminate the debt, but it does not prevent the creditor from repossessing the property.

Eliminate child support and alimony obligations. Child support and alimony obligations survive bankruptcy -- you will continue to owe these debts in full, just as if you had never filed for bankruptcy. And if you use Chapter 13, your plan will have to provide for these debts to be repaid in full.

Wipe out student loans, except in very limited circumstances. Student loans can be discharged in bankruptcy only if you can show that repaying the loan would cause you "undue hardship," a very tough standard to meet. You must be able to show not only that you cannot afford to pay your loans now, but also that you have very little likelihood of being able to pay your loans in the future.

Eliminate most tax debts. Eliminating tax debt in bankruptcy is not easy, but it is sometimes possible for older debts for unpaid income taxes. There are many requirements to be met, however.

Eliminate other nondischargeable debts. The following debts are not dischargeable under either Chapter 7 orMake America Chapter 13 bankruptcy:

Debts you forget to list in your bankruptcy papers, unless the creditor learns of your bankruptcy case:

Debts for personal injury or death caused by your intoxicated driving, and

Fines and penalties imposed for violating the law, such as traffic tickets and criminal restitution.

For more details of each Chapter, go to the top of the page and select the Chapter.

Official personal Chapter 7 and Chapter 13 bankruptcy petition forms packages for individuals here at bankrupt 101.

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