Most bankruptcies are the result of overwhelming medical bills. Increasing medical costs and increases in the number of uninsured people are sure to lead to more bankruptcies in the future. Recent changes in the bankruptcy law require you to pass a means test to be able to file a Chapter 7 bankruptcy. If you are unable to pass this test, you will only be able to file Chapter 13.

The complexity of bankruptcy laws and procedures means most people will have to hire a bankruptcy attorney. Your attorney can assist you in reviewing your financial situation and help you figure out which type of bankruptcy you can and should file. You can approach the court with a Chapter 7 filing request and be denied forcing you to file Chapter 13. Chapter 7 is commonly known as a liquidation plan. Your case will be assigned a trustee who will liquidate nonexempt assets and distribute the funds to your creditors. Even if you have no assets for sale your debts will still be permanently discharged. Chapter 13 is commonly known as the wage earner bankruptcy. This is for people who can afford to pay some debt but they need to be brought back from the brink. Your house may be nearing foreclosure and your credit cards fees spiraling out of control. This type of bankruptcy can stop this, let you take a breath and come up with a repayment plan over 3-5 years all while allowing you to catch up on your mortgage and keep your home. You can stop harassing phone calls, collection letters and wage garnishments. This is a great option for people with steady income that have been put behind financially due to unforeseen circumstances and just need a chance to catch up. You can visit a credit counseling agency prior to hiring an attorney to explore the option of negotiating with your creditors without filing for bankruptcy. When that is not possible, it is time to find a bankruptcy attorney in your city to represent you and get your case started. There used to be a stigma about bankruptcy but these day’s creditors will jump at the chance to give you a second chance to rebuild your credit. They are now more aware that the experience is not something anyone wants to do again so they will likely make better choices the second time around. You cannot file Chapter 7 for six years after your original filing date. There are no time constraints for filing Chapter 13.

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