Consumer Credit Counselling is often a first step, but once you realize you can't keep up with the payments, you should take action quickly. Ignoring the problem will only make it worse as creditors pile on late fees and take legal action to take your property and wages.

Types Of Personal Bankruptcy

There are two types of bankruptcy typically filed by individuals:

Chapter 7 is the most common, where most of your debts are wiped out. A Chapter 7 filing will discharge your debts, except for alimony and child support, federally insured student loans, criminal and traffic fines, state and federal taxes due within the last three years, and debts that resulted from wilful malicious acts.

Chapter 13 allows you to pay back your debts on a payment plan, and may also reduce some of your debts such as medical bills. A Chapter 13 personal bankruptcy puts you on a mandatory repayment plan where your income is taken into account. You are usually given longer to pay off your debts and may have some of the debts reduced such as medical bills and past utility bills.

Filing Personal Bankruptcy

Once you file, all of your creditors will be notified and a court issue will stop wage garnishing, creditor harassment, and foreclosures. This is often the first time you can breathe a sigh of relief as the phone stops ringing and you can get back on track with your life and your credit.

Personal bankruptcy can be a clean start to a bright future.

It is very difficult for anyone to decide to file bankruptcy, and is rarely taken lightly, despite what your creditors say. Once you file for personal bankruptcy you should work with a financial advisor to learn what happened, and how you can avoid taking on debt in the future.

Do-It-Yourself or Hire an Attorney?

You can hire an attorney for any where from $600 (for individuals only), to $1,000 and up (for couples and businesses). You can also spend hours away from work at your lawyers office, or you can file bankruptcy 100% online with no office visits required. For 95% of the people filing bankruptcy, you can hire a paralegal, who is well-versed in the preparation of bankruptcy filing documents, to do the work so you file quickly and cheaply.