The federal bankruptcy law exists to provide individuals in financial stress with a fresh start. Bankruptcy can be initiated by the individual in debt or by the creditor. Creditors are usually prohibited from seeking fulfillment of their debts once bankruptcy proceedings have begun. Many Bankruptcy attorneys offer a free initial consultation to evaluate your financial situation.

Bankruptcy Basics

The most common Bankruptcy Filings are:

• Personal Bankruptcy
• Chapter 7 Bankruptcy
• Chapter 13 Bankruptcy

Personal Bankruptcy

Personal Bankruptcy allows the debtor to legally avoid paying most financial liabilities either temporarily or permanently. The bankruptcy filing must demonstrate the debtor has more liabilities than assets. For individuals, the two most relevant chapters in the code are Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy, also known as "liquidation" or a "straight bankruptcy" converts the debtors' assets to money. An appointed trustee sells the debtors' assets. The proceeds from the sale are then distributed to creditors. Most Chapter 7 Bankruptcy cases do not result in the debtor loosing all his / her belongings. However, if you feel your personal belongings may be at risk you should contact a Bankruptcy Attorney. Most Bankruptcy Attorneys' offer a free initial consultation.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy gives the debtor an opportunity to repay some or all of their debts, usually with better terms, including low or no interest at all. Chapter 13 Bankruptcy allows the debtor to use future income to pay off creditors. This basically means the debtor will not have to liquidate assets to pay off debts. Chapter 13 Bankruptcy is actually an adjustment or reduction of the debt owed for those with a regular income.

The debtor must begin to make payments within thirty to forty-five days after the case has begun. The payments are made to a trustee who will then pay the creditors. Chapter 13 Bankruptcy prevents creditors from directly collecting from the debtor. The creditors are required by law to follow the terms & conditions of the repayment plan. A Bankruptcy Attorney can prepare these terms on your behalf.

Bankruptcy Evaluation

A Bankruptcy Evaluation can help to determine if filing bankruptcy can help you with your debts. During the initial consultation, a local Bankruptcy Attorney will perform the following:

• A complete personal financial analysis
• Your states' bankruptcy laws
• What to do before filing bankruptcy
• How to recover after filing bankruptcy

Recent passage of the Bankruptcy Prevention and Consumer Protection Act in April 2005 has also resulted in major reforms in bankruptcy law, consult with a qualified Bankruptcy Attorney.