I recently lost my job and no longer can make the minimum payments, how can chapter 7 and chapter 11 bankruptcy help me?

First, check to see if your city sponsors a credit counseling service. If it doesn’t, call the closest bankruptcy court. Ask for the names of some of the reputable debt management agencies located near you that the court regularly refers petitioners to consult with as part of the bankruptcy filing process. They can usually get most credit card companies to lower their interest rates (if you join the agency’s program) and extend the amount of time you’ll have to pay off the entire principal. (You must make all of your monthly payments on time.)

You should also seriously consider running your personal financial situation by an attorney who specializes in bankruptcy law to be sure you’re pursuing the best course for your unique situation. This person can also advise you about whether a Chapter 7 or Chapter 11 bankruptcy filing might be best for you, should you prefer to pursue that course now (or in the near future -- if the debt management approach doesn’t work out for you).

Your bankruptcy law attorney can provide you with critical information about the main differences between these two chapter filings. Basically, Chapter 7 is usually pursued by those who have few major debts like a house mortgage or large, ongoing car payments. Chapter 7 filers are usually just trying to get rid of their high credit card debts so they can stay afloat financially during difficult times. Chapter 11 is frequently used by corporations or partnerships that want to submit a reorganization plan to the courts so their companies can keep selling goods or services to customers while paying off their debts over an extended period of time. (Be sure to ask if you are one of those individuals who might be better served by a Chapter 11 filing that a Chapter 7 one.)