Personal bankruptcy questions

So What Exactly is Bankruptcy?

If you are “flat broke” is that the same as being bankrupt? What is bankruptcy, exactly, anyway?

Bankruptcy laws are a series of regulations designed to assist both debtors and creditors to resolve the financial crises that can sometimes result when a debtor is having difficulty repaying any loans he or she has. Most individuals or companies that seek protection under the bankruptcy regulations are seeking a fresh start.

Each judicial district in the United States has a bankruptcy division, with a total of ninety divisions across the country.

There are two types of bankruptcy that are most common. They are generally referred to by the chapters under which they are classified in the laws. The two most common are Chapter 7 and Chapter 13. Chapter 7 allows for the dissolution of most types of debt, while Chapter 13 is used to reorganize debt and secure a repayment plan that is acceptable to the courts, the creditors, and the debtor.

The recent changes in bankruptcy regulations - the Bankruptcy Reform Act of 2005 - have made it more difficult and time consuming for individuals and corporations to file for the protection offered by Chapter 7. This was the purpose of the personal bankruptcy reform, and it has been successful at meeting that goal.

If you are considering getting the protection offered under the bankruptcy laws and regulations, you would be well advised to seek professional help so that you do not inadvertently file for the wrong type of bankruptcy or run the risk of filing incorrectly.

Although bankruptcy may seem like the easiest option for you to get out of debt, you should be aware that there are other alternatives that are much less likely to adversely affect your credit score, and filing bankruptcy is a long process that requires quite a bit of effort on your part.