Making The Bankruptcy Decision

Making the decision regarding whether or not to file for bankruptcy protection can be one of the most difficult decisions people ever have to make. To make matters worse, assuming one has made the decision to file, there is still the question of which type of bankruptcy protection to pursue. As with any other decision, a careful analysis of the pros and cons can be quite helpful. To that end, we are going to briefly examine them. As we do, we will assume you have not yet made the decision whether or not to even declare bankruptcy. If after reading this article you have decided to go that route, you will still need to research the various types. However, we will at least point you in the right direction.


Some of you will prefer to hear the good news first, and some of you would probably rather get the bad news out of the way right off the bat. We have made the wager that most of you would like to hear the good news first, so one thing we’d like to point out immediately is that as soon as you begin a bankruptcy proceeding, your creditors will be forbidden by the court to contact you again. Another advantage is that despite what you may have heard, you will be offered some credit rather soon after your bankruptcy. Of course, credit may be exactly what got you into trouble to begin with, so you may want to accept only secured cards.


Those things being said, the first piece of bad news we have for you regarding bankruptcy is the most important one. It will be visible on your credit report for ten years. Therefore, throughout that period of time, though credit offers will be extend to you, they will not be nearly as attractive as they would have been. As a matter of fact, there will be certain types of loans which you will be completely unable to get. Another risk is that not all of your debts will be discharged during bankruptcy. An attorney who specializes in bankruptcy will be able to clarify whether you have any debts that would remain.

Various Types

There are more than these, but the two main types of bankruptcy are chapter 7 and chapter 13. Chapter 7 bankruptcy tends to be favored by those with little to no assets which could be vulnerable in a bankruptcy proceeding. In this type of bankruptcy, most of your debts are simply liquidated. That is, they are forgiven completely. In a Chapter 13 bankruptcy, you still actually pay back your creditors over a period of time in installments dependent on your income. This is similar to a payment plan, but the advantage here is that your assets are legally protected from seizure as long as you fulfill your obligations.

The Final Analysis

In the final analysis, the best course of action is always to enlist the help of professional bankruptcy law experts when you are considering this course of action. That way, you can avoid any costly mistakes down the road. No matter what final situation you’re in, remember that there is always hope. By taking action now and changing you habits, you can have a brighter future.

Andy Gorton is the author and editor of the Bankruptcy Clinic

Andy Gorton – who has written posts on Bankruptcy Clinic Blog.

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