Are you planning on filing for bankruptcy?

  You may have missed a couple of mortgage payments due to sudden job loss or mounting credit card bills. In any case you are regarded as financially injured. As a matter of fact, more and more people are turning to bankruptcy but it has certain risks associated with it. Undoubtedly, bankruptcy allows you to start off financially again but you have to be prepared for the consequences also.

   The number of bankruptcy filings increased in 2005. Reports suggest that the number of people filing bankruptcy exceeded 2 million. And most of the corporate organizations hurriedly filed bankruptcy before the New Federal Bankruptcy Laws were introduced. The New Bankruptcy Laws, some say are more creditor-friendly and came into effect 17th October 2005.

   The number of people declaring bankruptcy declined during 2006 and 2007. However, bankruptcy filings increased in 2008 to a whopping 1.1 million. Personal bankruptcies are on the rise. With the changes in the New Federal Bankruptcy Laws, bankruptcy filings decreased. The fed has made it more difficult for consumers to file bankruptcy. The eligibility criteria have become rigid.

  Even though bankruptcy offers an opportunity to start afresh but it affects your credit rating and gets recorded in your credit report for a period of 7 to 10 years. Thereafter, your chances of getting credit reduce greatly and even if you qualify for one, you won’t be able to enjoy competitive rates.

So, when do you know if you have to file bankruptcy? Given below are certain instances and if you find yourself in a similar situation, you may resort to the final option of getting out of debt.

• If your house is facing foreclosure, you can think of filing bankruptcy.
  
• Making regular use of your retirement funds is another reason that can force you to file bankruptcy.
  
• If you are struggling to make payments for debts every month, you are a good candidate for bankruptcy.
  
• Wage garnishment by creditors is also a valid reason for you to declare yourself bankrupt.

   You can either file Chapter 7 bankruptcy or Chapter 13 bankruptcy depending on your requirements. A bankruptcy lawyer will be able to help you better in this regard. Since the New Federal Bankruptcy Laws have become more stringent, a legal expert can solve your debt problems and simplify the process for you.

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