If you are thinking about declaring a personal bankruptcy, this article contains some essential points for you to ponder. The procedures in filing bankruptcy in the United States somewhat differ depending in your local State. It is advisable to talk to your lawyer about the specific bankruptcy laws in your State. Here are the basic details of bankruptcy that you need to know.

To file or not to file.
Never seek bankruptcy without first considering all your options. Is it really necessary for you to file for bankruptcy? Remember, a record of bankruptcy will stay on your credit report for up to 7 years. Such a derogatory mark can be a major disadvantage in your life. If you are faced with a serious debt situation, perhaps you can take on other alternatives.

Under the new bankruptcy law, an individual is required to complete a credit counseling program six months prior to filing. Here, you’ll be working with a government-accredited credit counseling agency that will help you find the best solution to your financial problem. If the credit counseling agency recommends bankruptcy, then that’s the only time you can proceed with the filing.

Seek a lawyer.

Filling out your documents require the assistance of a bankruptcy lawyer. You may feel that you can do this on your own but answering the bankruptcy forms may be more complex than you think. Find a trusted and an experienced bankruptcy attorney who can help you with this crucial step. It is very important to give accurate information in all your documents as even a single false detail can cause complications or even a rejection of your application. Make sure that you and your lawyer are in agreement about the service fee as well.

The Income Means Test

The new bankruptcy law also requires bankruptcy applicants to take the income means test in order to determine whether they qualify for a Chapter 7 or a Chapter 13 bankruptcy. Everyone who files for bankruptcy would prefer a Chapter 7 bankruptcy which exempts the borrower from all his previous debts.
Nevertheless, if the income mean test shows that you are capable of submitting to a repayment plan, then you’ll be required to file for a Chapter 13 instead. Consequently, you’ll be under the obligation to repay your creditors through automatic salary deduction.

Be Prepared to Move On

After your lawyer has filed your bankruptcy application, it can take from 30 to 60 days before the final judgment is completed. If you’ve been approved, then it’s about time for you to move on in working towards improving your damaged credit.

A record of bankruptcy will stay on your report but it doesn’t mean that you can’t establish or apply for new credit. There are lenders that do provide credit to people with bad credit history and even those who have been through bankruptcy. Opening new credit will help you rebuild your damaged credit history as long as you stay true to your payment obligations. Hopefully, your experience in getting through a bankruptcy should teach you a lesson in managing your finances more carefully.

About the Author
Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving out Free Credit Repair and Building Ebook. NHBS also has a list of recommended bad credit credit cards.
Copyright 2009.

About Melanie Mathis

Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving out Free Credit Repair and Building Ebook. Connect with Melanie Mathis on Google+

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