Deciding to file for bankruptcy is a major decision that an individual faces.  A hasty decision is never a good idea.  It is usually always a good idea to talk with an attorney so that the individual contemplating bankruptcy has a better understanding of the process, regardless of whether or not that person decides to actually hire the attorney.  You can learn more about all the people involved in a bankruptcy.

The first question that individuals usually ask is how can I afford an attorney if I am filing for bankruptcy?  According to http://www.bankrate.com/brm/news/debt/20070615_bankruptcy_cost_lawyer_a1.asp, there are five ways one can reduce the cost of a bankruptcy attorney.  First, a debtor should add attorney payments to the bankruptcy case.  Debtors can stop making payments on certain debts, such as credit cards, in order to pay for a bankruptcy lawyer.  Second, look for reduced fees and pro bono attorneys.  Many attorneys have free consultations.  Third, limit the scope of the legal representation.  Limited scope of legal representation allows an individual to go to an attorney and have the attorney represent you on only part of your case.  Fourth, another possible route is free legal help.  An individual should ask if their local Bankruptcy Court has a pro se desk.  Finally, there are other resources out there that can be used to help an individual through the bankruptcy process.

The second most frequently asked question is how much do attorneys charge to file a bankruptcy?  According to http://www.ehow.com/about_5318883_much-do-attorneys-charge-bankruptcy.html, each attorney has a different way of charging for a bankruptcy.  Some will charge by the hour and some will charge a flat fee.  However, some will ask for a retainer with the rest of the payment to follow.  In addition to attorney charges, additional fees come about in a bankruptcy that you need to be aware of when choosing a bankruptcy lawyer.

According to http://www.bankruptcylawnetwork.com/2007/06/29/how-do-i-pay-my-bankruptcy-attorney/, most bankruptcy attorneys will offer the option of paying fees in installments, and in many cases an attorney can advise the prospective client how to restructure debt payments in anticipation of bankruptcy in order to free up enough money to pay the fees.  The best tip is to look for a bankruptcy lawyer who offers a free or low cost initial consultation, and get the attorney’s advice.

 Bankruptcy is one of the most difficult decisions an individual ever has to make.  Before making a decision on whether or not to file for bankruptcy, an individual should talk to an attorney and explain his or her situation.  According to http://www.daveramsey.com/article/the-truth-about-bankruptcy/ <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.daveramsey.com/article/the-truth-about-bankruptcy/> , bankruptcy is not something that he would recommend any more than he would recommend a divorce.  Few people who have been through bankruptcy would report that it is a painless wiping-clean of the slate, after which they just start fresh.  Bankruptcy is listed as one of the top five life-altering negative events that a person can go through along with divorce, severe illness, disability, and loss of a loved one.  Bankruptcy leaves deep wounds both to one’s credit report and to one’s psyche. 

            According to http://www.debtconsolidationcare.com/avoid-bankruptcy.html <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.debtconsolidationcare.com/avoid-bankruptcy.html> , there are seven reasons to avoid bankruptcy.  One, an individual’s credit is badly hit if that person files for bankruptcy.  Two, an individual may lose their property.  Three, not all of an individual’s debts can be eliminated.  Four, creditors and lenders of an individual may repossess property.  Five, bankruptcy has an adverse effect on an individual’s other finances such as buying a house, renting a home, or buying a car.  Six, an individual may not qualify for a secured loan for at least 2-4 years.  Finally, not all retirement plans are protected, if an individual files for bankruptcy. 

            Remember, there are a lot of benefits to filing bankruptcy, if a person has no other option.  However, a person who is contemplating filing for bankruptcy has to consider the negative effects of filing for bankruptcy. 

            According to http://www.financial-edu.com/why-should-you-avoid-bankruptcy.php <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.financial-edu.com/why-should-you-avoid-bankruptcy.php> , there are four good ways to avoid bankruptcy.  One way to avoid bankruptcy is to do debt consolidation.  Another way to avoid bankruptcy is through individual voluntary arrangements which enable an individual to reach a compromise with their creditors and avoid the consequences of bankruptcy.  Third, an individual could use counseling services from many free organizations for effective debt management.  Finally, an individual has the option to sell off everything, including their valuable assets, to pay off their various debts.

Just like individual debtors, a corporation can file for bankruptcy as well.  Just like an individual, a corporation must weigh the pros and cons of filing bankruptcy.  According to http://www.ehow.com/way_5717286_procedures-corporation-filing-bankruptcy.html, filing for bankruptcy on behalf of a corporation is different from filing as an individual, even though a corporation is treated as a separate legal entity under corporate law.  The financial and tax consequences of bankruptcy for a corporation can be complex and hard to predict.  Before a bankruptcy application is finalized, these consequences need to be taken into account.  

There are two main forms of corporate bankruptcy.  There is a Chapter 7 bankruptcy where a trustee is appointed by the court to supervise corporate assets, liquidate the assets, and distribute money to the corporate creditors.  In a Chapter 11 bankruptcy, the corporation submits a plan for reorganization of its operations.  According to http://www.corporationbankruptcy.net/, many businesses choose a Chapter 7 corporation bankruptcy when they will shut down the business or “go out of business” and liquidate all their assets.  One result of a Chapter 7 corporate bankruptcy is the loss of jobs for the company’s employees.  Sometimes a company makes this choice based on hardship within the company; other times the company’s creditors make the choice to file a Chapter 7 corporate bankruptcy. 

What happens to the stocks of a corporation, if the corporation files for bankruptcy?  According to http://www.sec.gov/investor/pubs/bankrupt.htm, a company’s securities may continue to trade even after the company has filed for bankruptcy under Chapter 11.  In most instances, companies that file under Chapter 11 of the Bankruptcy Code are generally unable to meet the listing standards to continue to trade on NASDAQ or the New York Stock Exchange.  However, there is no federal law that prohibits trading of securities of companies in bankruptcy.  Regardless, investors should be cautious because buying stock in companies that have filed a Chapter 11 bankruptcy can be risky.

Deciding whether or not to file bankruptcy is a huge decision as well as a very personal decision.  There are no set rules that say when an individual should file bankruptcy.  However, there are many different sources out there that can offer advice as to when it might be appropriate for an individual to file for bankruptcy.

According to http://www.bankrate.com/finance/money-guides/get-the-facts-on-bankruptcy.aspx, there are a number of things to consider if you are facing bankruptcy.  First, the debtor should see if they can solve their financial problems without bankruptcy.  Second, a debtor should not file until they have fixed the problem that has gotten them into their current financial situation.  For example, if a debtor is not going to have a clean slate 6 months from now then the debtor will just have a new set of bills and no bankruptcy options.  Third, a debtor should be aware of the ways to reduce the cost of filing for bankruptcy.  There are ways to cut the filing fees for bankruptcy.  Finally a debtor should know that bankruptcy doesn’t necessarily mean having to give up their car.  A debtor may be able to reaffirm their loan and keep their car.

According to http://consumer.abi.org/consumers/should-i-file-for-bankruptcy , some people find it helpful to file a bankruptcy case when they cannot pay their bills and they do not anticipate having the ability to pay their bills in the near future.  People also file because their financial situation is causing them emotional distress or depression, or because they would like to free themselves of debt now, if legally allowed, and have their income and assets to themselves in the future.

Finally, an individual should try to exhaust all other options before filing for bankruptcy.  According to http://money.usnews.com/money/personal-finance/articles/2009/04/21/should-you-file-for-bankruptcy.html, before an individual files for bankruptcy, they should consider whether or not they can work out their financial problems without filing for bankruptcy.  If an individual is unable to, then bankruptcy might be their best option.

Bankruptcy is a huge decision for a person in debt.  The question becomes for that person, when does filing for bankruptcy make sense?  According to http://www.investopedia.com/articles/pf/08/bankruptcy-filing.asp#12870097117542&close <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.investopedia.com/articles/pf/08/bankruptcy-filing.asp%2312870097117542%26close> , there are a few circumstances in which filing for bankruptcy can be beneficial.  The first is if the debtor has already tried to negotiate with their creditor.  If a debtor has tried to negotiate with a creditor and they have not been successful, then a debtor might have no choice but to file for bankruptcy.  Second, if their liabilities exceed their assets, a debtor may have no choice.  The major reason that debtors file bankruptcy is because they cannot pay their debts.  The third reason that filing might be right is if a debtor is trying to keep their IRAs.  The federal bankruptcy laws shield a debtor’s retirement accounts.  A debtor might want to consider filing bankruptcy to protect these accounts.

Deciding whether to file bankruptcy or not is a personal decision.  According to http://consumer.abi.org/consumers/should-i-file-for-bankruptcy <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://consumer.abi.org/consumers/should-i-file-for-bankruptcy> , some people find it helpful to file a bankruptcy case when they cannot pay their bills and they do not anticipate having the ability to pay their bills in the near future.  Other people file because their financial situation is causing them emotional distress or depression, or because they would like to free themselves of debt now, if legally allowed, and have their income and assets to themselves in the future.  Some people may find that bankruptcy is worth it even if they do lose some of their assets.

There are no set rules as to when a debtor should file for bankruptcy.  It is a personal decision and only the debtor truly knows if bankruptcy is right for them.  According to http://www.bankruptcyhq.com/bankruptcy-should-i-file <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.bankruptcyhq.com/bankruptcy-should-i-file> , studies suggest that bankruptcy may be right for a debtor in any of the following scenarios: the debtor has a large number of dependents, the debtor is older in age, the debtor has a large amount of dischargeable debt, or the debtor has a small amount of savings and assets. These are all important things to consider in deciding whether to file for bankruptcy, but each debtor must weigh the pros and cons based on their individual circumstances.

Considering Bankruptcy?

The first thing that many debtors ask attorneys about filing bankruptcy is what the effect will be on their credit score.  According to http://www.ehow.com/how-does_4564668_bankruptcy-affect-credit-score.html <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.ehow.com/how-does_4564668_bankruptcy-affect-credit-score.html> , when a person files for bankruptcy, the debts do not simply disappear as if they never existed.  The person’s history of late or missed payments, if they had one, will remain on their credit report and will continue to drag down their credit score.  Additionally, the bankruptcy will stay on their record for many years.  If a person files a Chapter 7 bankruptcy, this will remain on their credit report for ten years.  On the other hand, a Chapter 13 bankruptcy will stay on their record for 7 years after the repayment is completed.  There will be a negative impact on one’s credit score so long as the bankruptcy is listed on the credit report.

According to http://www.myfico.com/crediteducation/questions/Bankruptcy-Reach.aspx <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.myfico.com/crediteducation/questions/Bankruptcy-Reach.aspx> , a bankruptcy is going to be factored into your FICO score until it falls off of your credit report.  While it may take up to ten years for a bankruptcy to fall off of your report, the impact of the bankruptcy will lessen over time.  After a bankruptcy has been filed, the sooner you begin retaining or re-establishing credit in good standing, the sooner you can expect your FICO score to rebound.

Is it true that for some people declaring bankruptcy could actually improve their credit score?  According to http://www.smartmoney.com/personal-finance/debt/declaring-bankruptcy-can-improve-your-credit-score-20681/ <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.smartmoney.com/personal-finance/debt/declaring-bankruptcy-can-improve-your-credit-score-20681/> , part of the reason why a debtor’s score isn’t likely to suffer that much is that most debtors who are seriously struggling with debt don’t exactly maintain a top-notch credit score to begin with.  “In almost virtually every instance, the consumer will already have repayment problems such as late payments, very high balances, charged-off accounts or collection accounts,” says Rod Griffin, a spokesman for Experian, one of the three major credit bureaus.  In light of this, some consumers may even see a slight boost in their credit scores after filing bankruptcy. This is because a person’s credit is wiped clean when they declare bankruptcy.  The high balances are removed, as are any late payments or records of unpaid debts.  A debtor isn’t going to see a big jump in their score, but if they’ve just been scraping by, their score isn’t likely to fall much further.

In today’s society, bankruptcy is not uncommon.  In fact, even some of the largest businesses are filing for bankruptcy.  Blockbuster, which has been around for many years, announced that they are filing a Chapter 11 bankruptcy.  According to  http://www.bloomberg.com/news/2010-09-23/blockbuster-video-rental-chain-files-for-bankruptcy-protection.html, Blockbuster Inc., which is the world’s biggest movie-rental company, filed for bankruptcy after failing to adapt its storefront model to online technology pioneered by rivals such as Netflix Inc. 

            What is a Chapter 11 bankruptcy?  According to  http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter11.aspx, a case filed under Chapter 11 of the U.S. Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy. 

            According to http://www.bloomberg.com/news/2010-09-27/blockbuster-wins-court-approval-to-pay-studios-claims-for-movies-games.html, Blockbuster Inc. won interim court approval to pay as much as $40.4 million to studios to maintain the supply of movies.  Blockbuster can pay $28 million owed to Sony Pictures Home Entertainment Inc., Twentieth Century Fox Home Entertainment LLC and Warner Home Video, U.S. Bankruptcy Judge Burton Lifland in Manhattan said at a court hearing today. Those studios negotiated trade agreements with Blockbuster in March in which they received security interests in Blockbuster’s Canadian assets.  Blockbuster can pay other studios that negotiate agreements as much as $12.4 million, under Lifland’s order. 

            There are many different bankruptcy options for debtors.  A debtor must determine what bankruptcy option is best for them and their financial situation.  The best thing a debtor can do is to meet with an attorney and discuss their options.  Many law firms have discounted consultations.  This allows a debtor to come into an attorney’s office to discuss their situation with the attorney and not get stuck paying high attorney fees.  Every person’s situation is different so it is best that a person contact an attorney if they find themselves in financial troubles.

Before a debtor decides whether to file a Chapter 13 or Chapter 7 bankruptcy, the debtor should consider some basic options outside of the bankruptcy system.  Sometimes bankruptcy is the only sensible remedy for some debtors because of their debt problems.  However, an alternative course of action makes better sense for others.  According to http://www.moranlaw.net/consider.htm, to explore non-bankruptcy alternatives, a debtor should create a budget for their realistic, monthly expenditures for current living. 

            The first alternative is to do nothing.  For some people who are deeply in debt, the best alternative is to do nothing.  A debtor cannot be thrown into jail for not paying their debts, with the exception of child support, and your creditors cannot collect money from you if you don’t have money. 

            According to http://www.careonecredit.com/knowledge/alternatives-to-bankruptcy.aspx, to see if your creditors can help you, give them a call and explain that you are having trouble with your finances.  If a debtor explains that they are considering bankruptcy, the creditor may be willing to give the debtor an alternative payment plan to help them get through the difficult time.  Except for a few creditors, creditors must sue a debtor in court and get a money judgment before they can go after the debtor’s income and property.  However, an exception to this general rule is that a creditor can take collateral when a debtor defaults on a debt that is secured by that collateral. 

            According to http://www.bankruptcyinformation.com/bankruptcy-alternatives.htm, rather than file bankruptcy, a debtor may consider settling their unsecured debt at a reduced amount.  It is unlikely that an individual could do this independently but there are companies that will help a person negotiate with their creditors.  Also, attorneys may help a debtor negotiate with creditors. 

            If a debtor is contemplating whether bankruptcy is right for them, they should contact a bankruptcy attorney to get further advice.

            Chapter 13 is best for those who need time to pay off certain debts and who have enough income to meet the requirements.  A Chapter 13 is different from a Chapter 7 because a debtor gets to keep all of their property regardless of its values.  The downside to a Chapter 13 is that the debtor will have to pay their unsecured creditors such as credit card debts, medical debts, and most court judgments.  According to  http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter13.aspx <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter13.aspx> , a Chapter 13 bankruptcy is also called a wage earner’s plan because it enables individuals with regular income to develop a plan to repay all or part of their debts. 

            What are the costs involved with filing a Chapter 13?  Everyone who files a Chapter 13 bankruptcy has to pay $274 for the filing fee.  This is due either when you file your initial bankruptcy paperwork or in four equal installments, if the court allows it.  A debtor will also have to pay $100 to the credit counseling agency when they receive their mandatory pre-filing credit counseling and post-filing budget counseling.  If the debtor decides to hire an attorney, they can expect to pay an additional $2500 or more.  However, according to http://www.ehow.com/about_5372611_average-cost-chapter-bankruptcy.html <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.ehow.com/about_5372611_average-cost-chapter-bankruptcy.html> , the cost of filing for a Chapter 13 Bankruptcy depends primarily upon the complexity of the debtor’s financial situation, especially if they do decide to hire a bankruptcy attorney to represent them. 

            The final step is confirming the plan.  According to http://www.moranlaw.net/13workings.htm <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.moranlaw.net/13workings.htm> , once the plan is confirmed, it binds all the parties: the creditors must accept the payments provided; the values given in the plan for the secured portions of claims are fixed; and the debtor’s payments over the life of the plan are fixed, unless the debtor’s circumstances change and the plan is modified.  If a debtor is uncertain about bankruptcy they should contact an attorney.

Bankruptcy can be very helpful to a debtor, but it can also impact a debtor in a negative way.  A debtor must weigh the advantages and disadvantages before filing bankruptcy.  According to http://www.abanet.org/publiced/practical/bankruptcy_disadvantages.html <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.abanet.org/publiced/practical/bankruptcy_disadvantages.html> , a bankruptcy is a troublesome item on a debtor’s credit record for up to ten years and may affect a debtor’s future finances.  A study by the credit research center at Purdue University found that about one-third of consumers who filed for bankruptcy had obtained new lines of credit within three years of filing; one-half had obtained them within five years.  However, the new credit itself may reflect the record of bankruptcy.  As an example, a debtor may be able to get a credit card after bankruptcy but instead of an interest rate of 14 percent the debtor gets a rate of 20 percent as a result of the bankruptcy being on their record. 

            Another disadvantage to bankruptcy is the potential loss of property.  According to http://www.nacba.org/consumer/chapter2.php <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.nacba.org/consumer/chapter2.php> , one consequence of a Chapter 7 bankruptcy is the loss of nonexempt property or its value in cash.  However, this is not usually a problem for consumer debtors because they rarely have any nonexempt property. 

            There are a few more disadvantages of which a debtor should be aware.  According to http://www.articlesbase.com/credit-articles/disadvantages-of-bankruptcy-516316.html <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.articlesbase.com/credit-articles/disadvantages-of-bankruptcy-516316.html> , there are a few additional drawbacks to filing bankruptcy.  First, if a debtor is a businessman or a business owner and has been declared bankrupt, then their business will get closed as soon as the bankruptcy order is issued.  Second, a debtor will also have to submit all their valuable assets or belongings to the trustee.  Third, by becoming bankrupt the debtor’s bank accounts get closed and their credit cards will be taken away.  Finally, people who are in the process of leasing a product or buying a product on hire, will lose that product, and the product will be returned to the actual owner. 

            Bankruptcy has its advantages and disadvantages so it is important that a debtor know both and make an educated decision in determining if bankruptcy is best for them.