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Filing Bankruptcy Online or with a Bankruptcy Attorney?

Filing bankruptcy should only be considered when all other debt elimination plans have failed. These might include debt settlement, debt consolidation or credit counseling. Individuals considering bankruptcy are required to undergo credit counseling by an approved agency prior to petitioning the bankruptcy court.

Debtors filing bankruptcy will meet with their credit counselor to determine which chapter they are eligible to file. Personal bankruptcy chapters include 7 and 13. Chapter 7 is total liquidation of assets, including real estate and automobiles. Chapter 13 allows debtors to retain their assets through drafting a repayment plan

Many Americans have turned to filing bankruptcy in an attempt to save their home from forlosure. When a homeowner petitions the court, a "stay" is ordered and lenders can no longer persue foreclosure actions. Homeowners who want to retain their home must file Chapter 13 and provide proof they have the financial means to make monthly mortgage payments.

Although individuals can file bankruptcy without the aid of an attorney, it is strongly advised not to do so. The new bankruptcy laws implemented in 2005 have made the process complex and complicated. Filing bankruptcy on your own could result in a negative outcome or prevent you from being eligible to file.

Individuals unable to afford legal counsel might be entitled to low-cost or free legal assistance through their state or county American Bar Association. Bankruptcy attorney referrals are located through the American Bar Association website at

Once the debtor has undergone credit counseling and determined which bankruptcy chapter to file, their attorney must petition the Bankruptcy Court in the judicial district where the debtor resides. Documentation of assets, liabilities, income, expenses and proof of credit counseling must be presented with the petition.

Individuals who wish to reorganize and repay their debt will be required to attend a creditor meeting. During the meeting, creditors are permitted to question the debtor regarding circumstances which caused them to file bankruptcy. They can choose to accept or reject the proposed repayment plan. If rejected, the debtor can attempt to further negotiate or liquidate assets to repay the debt.

Oftentimes, creditors fail to attend the creditor meeting. If they do not attend, outstanding debts owed to them can be dismissed unless they send an attorney to represent them. Many creditors are willing to reduce the amount of debt owed, while others are unwilling to work with debtors on any level.

After the creditor meeting has concluded a hearing will take place in front of a bankruptcy judge. Regardless of whether creditors have agreed to your repayment plan or not, the judge makes the final decision. He may accept, reject or modify the plan. Once the final repayment plan is approved, the debtor is required to make regular payments to an assigned Trustee. This court-appointed representative will oversee the debtor's account until reorganized debts are paid in full.

During Chapter 13 bankruptcy repayment, debtors are prohibited from acquiring new debt without approval from the Trustee. Unless the new debt is absolutely necessary, Trustee's rarely allow debtors to accrue more debt while paying off bankruptcy debts.

Filing bankruptcy is a difficult decision that has far-reaching effects. It is imperative to understand the pros and cons, as well as the risks it presents. Bankruptcy can stay on your credit report for up to 10 years and prohibit you from obtaining affordable financing.

On the other hand, filing bankruptcy can significantly improve your financial situation and provide a fresh start. Before making a final decision, consult with a qualified bankruptcy attorney or download bankruptcy manuals at U.S. Bankruptcy Courts.