Hit by the Economy: Filing Bankruptcy for Debt Relief

Has the economy caused you to think about bankruptcy?  So many Americans have been bruised by the economy, but even more have been left in financial circumstances that are as devastating as being the innocent bystander taken out by a hit-and-run. Job loss, under-employment and unemployment that is so protracted you slip out of the statistics has taken its toll on hundreds of thousands of households.

Almost 1.5 Million

According to the United States Department of Justice, in the 12 month period that ended on March 31, 2010 over 1.47 million Americans filed for personal bankruptcy protection.  More than 1 million of those people filed under Chapter 7 bankruptcy and over 400,000 filed under Chapter 13. These figures represent a grim 32% increase over the same 12 month period from the year before.

 Since 2005, over 6.2 million Americans have filed for bankruptcy protection - so you are far from alone. Of course, some bankruptcies are the result of frivolous overspending and a lack of any type of financial planning but more and more individuals and families who were careful with their finances and did have some financial reserves are having to find relief from seemingly insurmountable debt.

One serious illness or prolonged unemployment can devour reserves and leave you with no way to pay debts. Bankruptcy, while painful, does offer relief from many types of debt.

Chapter 7 and Chapter 13

These are the two most common types of bankruptcy that are filed in the US. Deciding which one is right for you should be done with the assistance of a knowledgeable bankruptcy attorney who can analyze your financial situation.

• Under Chapter 7, assets are liquidated to pay debts

• Under Chapter 13, debts are reorganized and a court supervised payment plan which lasts 3-5 years is set up

Exemptions

When you file bankruptcy, you may be able to keep some of your assets. It depends on the type of bankruptcy, the value of the asset, the type of asset and even the state that you live in because exemption rules are covered by state laws.

Not all debts can be discharged in a bankruptcy either - so in a way you should realize that some debts are "exempt" from the bankruptcy. You can expect that if you have these kinds of debts, they will not be included in your bankruptcy and you will still have to repay them:

• child support and alimony
• government sponsored student loans
• taxes

• government penalties and fines (example: the fines you were assessed as part of a DUI conviction)

Get Legal Help

Bankruptcy is a complex legal process that will affect your life and your credit for years to come. You may think you cannot afford legal help, but you cannot afford to forego competent, professional advice when it comes to bankruptcy. Talk to an attorney about your situation and your concerns. Bankruptcy attorneys work every day with clients who are in a similar situation to yours.