Chapter 7 Bankruptcy and Chapter 13 Bankruptcy are legal options available to individuals who are saddled with overwhelming debt. While there are alternatives to bankruptcy, in some cases it is the most practical way for an individual to escape harassing creditors, confront financial difficulties, and achieve a fresh start. Bankruptcy is a legal proceeding that offers relief for debtors by providing a court-enforced temporary or permanent stay on some or all of their debts. A bankruptcy lawyer can help you handle your debts and return you to the road to financial stability.
Consumer bankruptcy (also called personal bankruptcy) can take two forms: Chapter 7 and Chapter 13. Chapter 7 Bankruptcy involves the sale of all non-exempt assets in order to pay off creditors. Chapter 13 Bankruptcy requires the creation of a debt repayment plan which can extend up to five years. The details of consumer bankruptcy changed dramatically on October 17, 2005, when the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect. Some of the changes included mandatory credit counseling, stricter eligibility for Chapter 7 filing, and additional burdens for lawyers. Understanding these changes is very important if one is considering filing for bankruptcy. Consult a bankruptcy attorney for more help in understanding bankruptcy law and your options for dealing with debt.