Becoming bankrupt is the sort of event that can destroy marriages, impact or lose your job and generally just take you to the very end of your own ability to think straight. At a corporate level lots of people can get hurt.

Plasma TVs, home furnishings, and every other type of consumer item that high tech manufacturing and cheap foreign labor yielded was seemingly bought by the truckload. Case in point: Ever been in a Best Buy on a Saturday? Given the number of people buying things, you’d think they they are giving stuff away…

But, many consumers eventually need to face their financial situations when it doesn’t look like it will be realistic to think they’ll be able to service their debt loads. Regardless of whether their past purchases were necessary or not, principal amounts & fees can rapidly add up for people who didn’t plan ahead accordingly or who experience job losses. And high levels of unexpected debt can result from extended hospital stays or prolonged illnesses.

When filing bankruptcy, if you decide this is your only option, it will stay on your credit report for several years. However, if the creditors are hammering on your door, you already have black marks against your credit.

If you have tried everything else and you cannot possibly figure a way out of the mess that you are in, it may be time to file bankruptcy. Especially if you do not want to lose your home. Families with small children facing foreclosure may just be steps away from having no where to live. In this case and many others the only way they can continue to provide a home for their children and themselves is to file for bankruptcy relief.

When you file bankruptcy, Chapter 13 is the one most people choose because with the approval of the court, you are allowed to keep your home, your vehicle, and your personal belongings. This is extremely important especially if you have a family.

When you submit a proposal to the court of how you are going to get your debts straightened out, they will usually allow you to keep your primary assets. However, you must be able to make payments against the debt you owe, you must be employed and have enough income to make these payments.

This does not release you from making the payments that you owe on a regular basis either. The theory behind bankruptcy is to give you extra time to pay on the debt for which you are behind. The plan that is approved by the court must be adhered to for the bankruptcy to stay in effect.

Chapter 7 bankruptcy is another option if you want to get out from under the debt you have and start fresh. Although it does remain on your credit report, you can get relief from credit card debt, garnishments, medical bills, and usually personal loans.

Liquidation (selling) of your assets is one way Chapter 7 can help. However, if you do not have assets that you can get enough money from to pay off at least part of your debts, your appointed trustee will not worry about doing this. This is just for the non-exempt assets that you may have which many people do not even have enough to make it worthwhile. This would make the process of putting it up for sale more costly than what it would bring at sale.

Note: in the case of chapter 13, the records of your bankruptcy stay on your credit report for 10 years, which can make taking out a loan a difficult proposition. However, if that’s what you have to do, than that’s what needs to be done. Hopefully this info on the types of bankruptcy will help you know which is the right choice for you.

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