Filing Bankruptcy

Filing bankruptcy should be the last resort to solving your debt problems. But if you've exhausted all other types of debt solutions and have no other choice, National Debt Crisis Center can provide information about filing bankruptcy as well as how bankruptcy will affect your life. Before filing bankruptcy, contact us online or call National Debt Crisis Center at 1-800-334-6797 to be sure that bankruptcy is the best debt solution for you!

Types of Bankruptcy

There are two types of personal bankruptcy: Chapter 7 and Chapter 13. Bankruptcy may get rid of unsecured debt, stop foreclosures or repossessions, negate wage garnishment, and halt debt collection. You may be able to keep certain assets, under certain exemptions, which vary state to state. However, personal bankruptcy does not remove financial obligations such as alimony, child support, fines, government student loans and taxes. Both types of bankruptcy will negatively affect your credit score, and remain on your credit report for 7 to 10 years.

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy involves the liquidation of all your assets, excluding exemptions, to pay off your creditors and discharges the remaining unsecured debt. You can file for bankruptcy once every 6 years and Chapter 7 remains on your credit report for 10 years.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy allows you to keep certain assets, such as car or home, provided you meet the financial obligations outlined under your court approved repayment plan. Chapter 13 repayment plan usually lasts for 3 to 5 years and requires that you have a regular source of income. Chapter 13 remains on your credit report for 7 years.

Bankruptcy Fraud

According to the IRS, about 10% of all bankruptcies are fraudulent** where the individual filed bankruptcy after making large luxury purchases, unloaded their assets to family/friends or concealed assets from the courts. Any purchases made in the previous 60 days will come under heavy scrutiny during a bankruptcy. If a judge feels the bankruptcy is in any way fraudulent, the court will dismiss the bankruptcy case. In addition, many creditors are now performing their own bankruptcy investigations making it even more important that you meet all bankruptcy guidelines.

** Bankruptcy Fraud - FY 2001 Criminal Investigation (CI) Annual IRS Report