Personal bankruptcy is a legal proceeding in which a person is released from the obligation to pay most or all of his or her accrued debt. A declaration of bankruptcy stops creditors from trying to collect debts at least until the law has sorted them out.
Bankruptcy is not the right step for everyone who is in debt. The requirements and the consequences mean that careful consideration should go into any decision to seek individual bankruptcy relief. For example, bankruptcy information (both the date of your filing and the later date of discharge) stays on your credit report for 10 years, and can make it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job.
The process of filing for personal bankruptcy is complex. For example, the majority of people who plan to file for bankruptcy protection must get credit counseling from a government-approved organization within 180 days before they file and must complete a debtor education course to have their debts discharged. Individuals must also determine which type of bankruptcy they should pursue (Chapter 13 and Chapter 7 are the most common).
Resources available online can provide more information and answer some common questions of those considering personal bankruptcy. Sites that provide help include Lawhelp.org (www.lawhelp.org), which has information about bankruptcy laws in different states, fact sheets, referrals to legal aid organizations that can help and more.
The Federal Trade Commission offers information on its website (http://www.ftc.gov/bcp/menus/consumer/credit/debt.shtm) and The United States Trustee Program, part of the Justice Department, has information on its site about obtaining credit counseling and debtor education (http://www.usdoj.gov/ust/eo/bapcpa/ccde/index.htm).
Failure to file properly can result in dismissal of the bankruptcy case, denial of discharge or even criminal prosecution. Those considering filing for bankruptcy should make every effort to consult an attorney knowledgeable in bankruptcy law.
