Generally speaking, there are three types of bankruptcy. You can file a chapter 7, 11, or 13. However, for most individuals, it will come down to choosing between a chapter 7 and 13. The two versions are the most popular for individuals to file, but are very different from one another. You should never declare bankruptcy unless you completely understand what it will entail and that, it should go without saying, includes what each chapter means.

First, let’s look at chapter sevens. When you declare a chapter seven bankruptcy, you’re essentially telling the courts that you want relief, but are looking to pay off your debts as soon as possible. The trustee will look over your assets and essentially liquidate whatever possible in order to pay back your creditors. Namely, this will pay off things like medical bills and credit cards. In order to qualify for this chapter of bankruptcy, you have to prove that you have little or absolutely no disposable income at your disposal. Those who make too much money may find that they can only declare a chapter 13 bankruptcy.

A chapter 13 bankruptcy is different. This type of bankruptcy is for those with some type of steady income who are, therefore, capable of repaying their creditors to some degree. As we mentioned before, for some people, this is the only option they have for declaring bankruptcy.

The benefit of a chapter 13, however, is that it allows for debtors to catch up on mortgage payments they may have missed. It can also be used to strip away wholly unsecured junior liens that may be on a debtor’s home.

As you can see, the two most popular types of bankruptcy vary greatly from one another. So it pays to speak with a bankruptcy attorney who can identify which one is best for you and your situation.

Declaring bankruptcy is a serious matter that needs to be considered carefully. Long before declaring bankruptcy, you should consider meeting with financial professionals who can help you ensure it’s the right decision to make. Filing bankruptcy only takes a few minutes, but it will have longstanding effects even after the relief it provides is over. One prime example is your credit score.

Without a doubt, the worst thing you can have on your credit score is having had declared bankruptcy. For most people, having accounts of collections listed is considered the worst case scenario. Bankruptcy is a step far past that. It means you were in collections and weren’t able to pay yourself out. Instead, the courts had to intervene.

This doesn’t mean filing bankruptcy isn’t sometimes the right move. Sometimes it’s the only move you have to make. The whole reason bankruptcy exists is because, sometimes, people need some help in order to get back on their feet.

Sometimes, too, it’s important to consider that your credit ranking is probably going to suffer either way if you’re in a place where declaring bankruptcy is something you’re considering. Even if you’re able to work your way out of debt, it could be years of fighting off bill collectors and watching your credit score take a beating.

In such a situation, declaring bankruptcy, getting some breathing room, and working from a fresh start may be the right thing to do. It will take a lot of effort, but you can always work toward better credit once you’ve declared bankruptcy.

You’ll still want to speak to a bankruptcy attorney or some other kind of financial professional before filing though. Although filing bankruptcy can give you relief, it can also be the last step before something worse, like foreclosure. Then it hasn’t done much for you and you can expect your credit score to really hit rock bottom.

No one ever wants to think that they may have to declare bankruptcy, but it’s there for a reason and sometimes, it really is your best bet. The idea behind bankruptcy is that the government recognizes that sometimes you’ve painted yourself into a corner. Instead of making things worse, you’re allowed a clean slate, so long as you declare bankruptcy and deal with the ramifications. That being said, bankruptcy has long term consequences, so you shouldn’t go declaring it until you absolutely have to.

Are any of the following realities for you at the moment?

• Bill collectors are calling you.
• You only make the minimum payments on your credit cards.
• You use credit cards to purchase necessities.
• You’ve considered debt consolidation .
• You don’t know how much you really owe.
• Just the thought of going through your finances is enough to make you feel anxious or scared.

If two or more of those sounded familiar, you definitely want to start thinking about how bad your finances are. Although it can be difficult to sit down and do, it’s time to untangle your finances and find out where you stand.

To do this, you must take an inventory of your liquid assets. This includes everything, so don’t leave out any bonds, stocks, retirement funds, saving accounts, real estate, college savings, vehicles, etc.

When you have that done, it’s time to compare their value against how much you owe. Take all your debt, add it up and see what’s more: what you owe or what you have.

Even if you have more debt than assets, it may not be time to declare bankruptcy quite yet. Speak to a financial professional first or even a lawyer. They’ll help you see the reality of your current situation and explain to you what bankruptcy will entail.

No matter what, bankruptcy should never be a decision made lightly. Consider the above before you make it official.

Unfortunately, debt has become practically a fact of life for most people. That doesn’t always mean it’s a disaster, of course. But, the majority of those with any kind of debt would admit that they’d like to get rid of it sooner rather than later. Of course, for some, debt is an overwhelming feature of their life responsible for all kinds of anxiety.

If you land in or close to this second group, you need to take steps toward handling your debt. The first step is acknowledging that it’s there and not going away on its own. In fact, it will only get worse if you don’t address it.

Don’t make the mistake of thinking you’ll use one line of credit to pay off another. You still hear people recommending this for some reason, but the truth is that it’s just a great way to ensure your debt remains quick sand: something you’re constantly getting deeper and deeper into.

Take stock of the situation. If you’re truly going to have trouble paying back your creditors, contact them and say as much. Creditors will deal with someone having problems with their debt much better than they will someone they think is avoiding them and intent on not paying.

We’ve all heard the squeaky wheel gets the oil, but that doesn’t always apply. Just because one creditor is making the most noise doesn’t mean you should pay them off first. Always prioritize your debt and start with the most important like rent/mortgage, utilities, etc. First address the ones most likely to radically change your quality of life if you don’t pay them. Then you can move on to others.

Finally, start looking for ways to bring in more income. Can you handle a part-time job? Are there things you’re unnecessarily spending money on? Every little bit helps as you’ll keep your creditors happy and help keep the interest you owe to a minimum.

It’s never easy deciding to file for bankruptcy. However, once you’ve made the decision, it shouldn’t be too hard to get through the process and, of course, soon you’ll be enjoying a new beginning and the relief that comes with it. That being said, you need to be careful about what you do prior to filing a bankruptcy. Some decisions can actually ensure that your experience is far worse than anything you experienced leading up to it.

For example, you may feel tempted to lie on your paperwork. The same can be said for when you meet with creditors. If you don’t, you’ve committed perjury and the target of criminal prosecution. Understand, too, that creditors really want their money, so it’s not like sneaking a white lie past them is really a risk even worth taking.

Also know that, while bankruptcy is a form of debt forgiveness, that doesn’t mean not paying your taxes is now an option. Some people let them coast, even for a number of years, if they plan on filing bankruptcy I the future. This is never a good idea, but when you’re hoping to receive the benefits of bankruptcy, it’s an especially bad one. First of all, there may be tax claims that take priority in your case. Secondly, though, your last two years of tax filings are necessary for the courts to establish your past and current earnings, as well as any assets you may own.

Lastly, now is not the time to rack up new debt because you think you’ll soon be free of it. A creditor will have a very good case for objecting to your bankruptcy if they can prove you were putting more purchases to credit within the past 70 to 90 days.

If you’re considering bankruptcy, speak to a lawyer who has experience helping others in your scenario. They’ll be able to walk you through the process and ensure you don’t make mistakes like the above or any others.

Bankruptcy is always a scary prospect for people to face. Sometimes, though, it really is for the best; it’s a necessary step to take in order to move forward. That being said, you should still consider the alternatives to filing bankruptcy before taking said steps. It has permanent ramifications you’ll need to live with, after all.

The first thing to consider when thinking about declaring bankruptcy is what the worst-case scenario would be if you just didn’t do it. If you have little to no income, you might be what is known as judgment proof. This is also referred to as collection proof as it means creditors would have nothing to gain by suing you. You have nothing for them to be awarded, so it’s really not worth their time.

Along the same lines, sometimes creditors just opt to write off debt rather than waste resources going after it. That debt then stays on your record for seven years, but it’s then erased and that’s all you suffered.

Of course, you’re not judgment proof for life. If your financial status changes, these creditors may all of a sudden worth their time again if they hadn’t written off the debt.

Another option is to negotiate with your creditors. Often, you’ll find that they just want their money (or as much of it as possible), so they’re willing to work on something with you. A debt management agency is also helpful in this situation too, as they’re often better at negotiating and add an air of validity to your intent.

Sometimes, though, after considering or even trying these alternatives, you’ll find that bankruptcy really is the best or only option you have. If that’s the case, speak to an attorney. You don’t need one to file, but they can help you with the process to ensure it goes as smoothly as possible.

Depending on how you use them, credit cards can be a great and beneficial payment option or they can feel like a deal with the devil. Millions of Americans suffer under the weight of their own credit card debt. If this describes you right now, consider the following tactics for getting out from under it.

Some people have experienced success by paying off the credit card they owe the least on first and then moving down the list until you get to the one you owe the most on. This counter-intuitive approach, which ignores interest rates, is all about behavioral modification. The idea is that by paying off one, manageable form of debt, you’ll be more fired up and mentally able to approach a bigger one.

On the other hand, you may feel ready to tackle the credit card you owe the most on. This is generally considered a good idea because that large debt is only getting bigger as interest gets tagged on. Going after the largest first is a realistic method for those who are motivated by numbers and are in touch with the fact that something really needs to be done about their debt. Otherwise, it can be excuse to never start because it’s too big a challenge.

If you have more than $1,000 in your savings, it might not be a bad idea to use the excess to begin paying down some of your credit card debt. You always want an emergency fund of some sort, of course, but credit card debt is sometimes that emergency. That $1,000 may get used sooner rather than later if your debt is bad enough that it starts causing you serious problems.

There are many ways to handle credit card debt. Above are there of the most common methods people have used to wrestle control back for their debt and start over.