The stress and financial debt has put too much weight on you. You have thought long and hard, and you have decided to file for bankruptcy.

The first thing you need to decide when going down this path is which chapter of the bankruptcy code suits your situation. The two main chapters of the bankruptcy code for individuals are chapters 7 and 13. You may not understand them well and may want to get a bankruptcy lawyer.
Below is a basic overview of what the two chapters describe:

Chapter 7 is also known as a straight bankruptcy and is the most common chapter of the bankruptcy code. Under this chapter of the bankruptcy code, an individual will turn over all of their non-exempt properties to their bankruptcy attorney. The attorney will in turn take this property and sell it for as much as they can to pay off the individual’s creditors. When filing under this chapter you are required to fill out a form known as the “Financial Statement of Affairs” The form must list all your debts that you want to be erased. You should fill this in perfectly and honestly and not miss anything. If you do miss out filling in the debt, you will not be discharged from it.

A person should not leave out any debts because they may feel embarrassed or may not want their lawyer to know about. Further listing any debts that are not real is considered as bankruptcy fraud and is a serious crime. A person must always fill out the forms in detail and honesty. The petitioner will then have to start managing their finances and adhere to their attorneys plan and then after a certain period the person will be discharged from their debt. In most cases the individuals have little or no assets to turn over, so this chapter is the most common.

Chapter 13 also known as reorganization bankruptcy. This chapter is for individuals who do not want to turn over their non-exempt property to the attorney’s and also want to pay back their debts. In such a case what happens is the bankruptcy attorney will formulate a plan where an individual can pay off the debts over a period of 3 to 5 years. This is done by considering how much money an individual would need to live with basic necessities and any extra income is channeled towards the debt repayment.

Once an individual has filed for bankruptcy, the bankruptcy is on their credit report for 7 to 10 years, so it is important that an individual takes the advice of their bankruptcy lawyer. A bankruptcy will hurt your credit score, but it is a fresh financial start for individuals who find themselves hopelessly buried in debts they cannot pay off. Once an individual has filed their bankruptcy they can begin fresh with no debts and the ability to start a healthy financial life. After an individuals files for bankruptcy, any more assets they earn are 100% theirs and are not a part of the bankruptcy case.

Many different codes and variants of the bankruptcy law are used in filing a bankruptcy.