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Bankruptsy or Foreclosure you Choose.

Bankruptsy is a legal way to obtain relief from debts and obtain a fresh start in life. Both individuals and businesses can file for bankruptsy. Depending on the circumstances and amount of debts, bankruptcy allows for complete dissolution of debt or reorganization of debt through an extended repayment plan.

Five bankruptsy chapters are available including 7, 9, 11, 12 and 13. Chapters 7 and 13 are the most common personal bankruptcy chapters, while 9, 11 and 12 are typically reserved for businesses including partnerships, sole proprietorships, corporations and farmers.

Chapter 7 bankruptsy involves total liquidation of non-exempt assets and discharges all outstanding debts. Chapter 13 bankruptcy allows debtors to reorganize their debts and repay creditors over an extended period of time.

Filing personal bankruptsy is complicated and requires petitioning the bankruptcy court. Therefore, individuals are advised to work with a bankruptcy attorney to ensure all documents are filed properly and in a timely fashion. Once the bankruptsy petition is filed, the debtor is legally protected from any further contact or actions by their creditors.

Although filing bankruptsy can provide relief from harassing creditor calls and temporarily stop foreclosure proceedings, there is no guarantee bankruptsy will be granted. The judge presiding over the case will determine if the individual or business meets eligibility requirements and if bankruptsy is the best course of action.

In 2005, Congress signed the Bankruptcy Abuse Prevention and Consumer Protection Act. BAPCPA requires all individuals filing for bankruptsy protection to attend credit counseling through an approved U.S. Trustee Program agency.

It is important to understand filing bankruptsy exposes information regarding your personal finances to the general public. Bankruptsy filings are handled through Civil Court and become a matter of public record.

Individuals filing for Chapter 13 bankruptcy protection might be subject to payroll deductions. Although your employer cannot terminate your position due to bankruptcy proceedings, it can be quite embarrassing to have them be informed of your financial demise.

Before making a final decision to file bankruptsy, consider alternatives such as credit counseling, debt consolidation, debt settlement and debt management. While it may take longer to pay off debts, bankruptcy alternatives are not as detrimental to credit and can help you get back on track.

Learn more about alternatives to bankruptcy and obtain additional information on the various bankruptcy chapters by visiting Simon Volkov's extensive blog.