Bankruptcy Basics

(The Following content is taken from Chapter 5 of The Free Credit Repair Kit )

            Without getting too specific, bankruptcy is a legal declaration that says you aren’t solvent and your assets will be distributed among your creditors.  However, bankruptcy is a lot more complicated than that basic definition.

            Bankruptcy is controlled by Federal law in the United States.  However, State law does affect the way it’s carried out locally.  For example, the determination of whether or not you’re eligible to declare is found at the State level.

            If you’re completely overwhelmed by the amount of debt you have, bankruptcy can help to wipe the slate clean for you to start over.  However, it’ll stay on your credit report for as many as 10 years and will affect your ability to receive credit until that time.  You need to take this decision very seriously.

            When you decide that bankruptcy might be right for you, the best thing you can do is hire an attorney to assist you with the process.  While you can represent yourself in bankruptcy court, it helps to have someone in your corner who knows the ropes.

            Assistance from an attorney does have a price.  You can spend anywhere from $500-1000 to get legal representation, but that amount is probably much smaller than the amount of debt you actually deal with on a monthly basis.