Until recently, credit was easy to obtain. In the light of the financial crisis, institutions and banks have become less inclined to extend credit and that same crisis has suddenly brought massive insecurity to many as they struggle to cope with high levels of debt.

Credit cards have played a major role in this. We all know how easy it is to live beyond one’s means by supplementing our spending with credit card debt. The problem is that it has to be paid at some stage, and for some, just the monthly interest is more than they can afford.

Some short term relief can be found using balance transfers to cards with lower interst rates, but a long term solution has to be arrived at eventually.

For many, the chance of wiping away this debt and starting again with a clean financial slate is very appealing. Declaring yourself bankrupt can do this, but should only be considered after some serious thought as to whether or not the situation can be saved, and should be only ever be a last resort.

A number of commercial organisations have appeared recently offering to help with your bankruptcy,. I have no personal experience of them, but suggest you tread very carefully if you are thinking of employing one.

Although it may seem expensive, I would recommend that you hire a specialist bankruptcy lawyer from the outset, one that understands your state’s bankruptcy laws. This is your financial future at stake and you want the best advice you can afford.

Before declaring yourself bankrupt, you need to check that you are, in fact eligible. There are 3 possible reasons for ineligibility.

If in the last 180 days you have, of your own accord, dismissed your own bankruptcy case you are ineligible.

If you have previously declared yourself bankrupt and received the discharge within the last seven years you are ineligible.

If you have had a petition for bankruptcy discharged (you did not adhere to the bankruptcy code of practice) in the last 180 days you are ineligible.

Assuming you do not fall into any one of those criteria, you may proceed.

Chapter 13 and Chapter 7 are the most common chapters to file bankruptcy under although there are others. Your lawyer will advise.

Chapter 7 bankruptcy is often regarded as the “chapter of choice” as you are no longer responsible for any outstanding debt (there are some exceptions), after your assets have been sold and the proceeds distributed amongst your creditors, giving you a completerly fresh start. Chapter 13 bankruptcy laws allow you to keep your assets and pay off your creditors over 3 – 5 years.

For more useful information about declaring yourself bankrupt, including information on things to consider prior to filing and information on lawyers, visit www.declaringyourselfbankrupt.net.

categories: Bankruptcy,Liquidation,Insolvency,Finance,Money,personal finance,Banking,financial health