What is Personal Bankruptcy

Personal Bankruptcy is the filing of a petition with the bankruptcy court to obtain protection from the debt collection activities of your creditors.

The most common trigger for personal bankruptcy is when your debts exceed the value of your current income and property combined.

The main reasons for filing are the cost of unexpected medical expenses, credit card debt, job loss, and marital separation or divorce.

At the end of the bankruptcy period, some or all of your debts will be canceled.

The two main forms of personal bankruptcy available to the debtor are Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy involves liquidation of your assets, whilst Chapter 13 Bankruptcy gives the debtor a chance to reorganize and pay off their debts over a 3 to 5 year period.

Most often filing a petition is a simple process, which can be handled through a paralegal. However, in complicated cases you may need the advice of a qualified lawyer. A bankruptcy may stay on your credit file for seven to ten years.

You really shouldn't look on filing bankruptcy as any kind of personal failure. Many people get into debt through no fault of their own, and once in the debt spiral it can become impossible to break out without being given an opportunity to reorganize and gain some breathing space.