Declaring bankruptcy can affect several aspects of your life – on the financial as well as personal front. It is a serious decision which should not be taken without careful though and consultation with the right experts. You should look into and assess the potential of all the alternatives available before you decide to file for bankruptcy. This warning however, does not go to say that declaring bankruptcy is not a good idea for many, it definitely can be the only solution in some cases. Take the decision keeping your own as well as your family’s interests at heart.

The 2005 changes in the bankruptcy law have made it a little more difficult to choose personal bankruptcy as an option. The idea behind this was purely to ensure that the people who opt for it are truly struggling with their finances and not using bankruptcy as an excuse to escape liability. Only those who could not even afford to pay their bills became eligible to file for bankruptcy under Chapter 7.

The idea behind this chapter is to help give you a clean slate. It will help you wipe out all your debt without a repayment plan in place. There is a means test that you will have to undergo. If your income is below the recommended level for the median income of your state, then this test is not applicable to you.

In the case that your income is higher this is a mandatory test that you have to undergo. People who have qualified before the change in law will in all probability qualify again. It will also become mandatory to hire financial counseling services. If you fail to pass the means test, then you will have to file for bankruptcy under Chapter 13. What this essentially does is create a repayment plan for you which will be spread across 3 to 5 years. Before you apply for personal bankruptcy, bear in mind that it will have severe consequences on your credit rating. It may not be of immediate consequence to you, but it may be important going forward. No matter which chapter you file bankruptcy under, though difficult, you will always be able to spring back.

Brian Joneta also writes about Bankruptcy and Credit issues including

Declaring Personal Bankruptcy and Bankruptcy Automatic Stay

Also read more on bankruptcy at

Bankruptcy Law Blog.co.in

Bankruptcy Lawyer Article Pile

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