Many people think that that the new bankruptcy laws have changed to the point they can no longer seek relief from debt through bankruptcy court. This is not true. Bankruptcy is still available to the consumer for debt relief, especially if they meet the required criteria.
Most people who were previously eligible to file Chapter 7 are still eligible under the new laws. They must pass a means test that determines income and monthly living expenses but most who seek protection from creditors will qualify for one of the bankruptcy chapters.
You can eliminate your credit card debt with Chapter 7. Chapter 7 is designed for those who have a high amount of unsecured debt. Once the means test has determined eligibility approximately 99% of the people who wish to file Chapter 7 will be able to completely eliminate their unsecured debt.
Most people will be allowed to keep their assets when they file bankruptcy. There are limits on values but most people are allowed to keep the things they need to live their everyday lives. Also, retirement accounts are protected from creditors. When you file bankruptcy you will not have to give up anything in a retirement account. Many creditors will tell you that you will lose everything but this is usually just a scare tactic to prevent you from filing.
You home equity is protected up to $50,000 per person. If the husband and wife file bankruptcy jointly they are allowed $100,000 equity in their home. If you do not want to file jointly one spouse can file without the other. Often one spouse will file on their personal debts without involving the other spouse. However, it is recommended that you file jointly if both of you are listed on the debt.
It is possible to rebuild your credit after bankruptcy. Many companies will offer credit to people who have filed bankruptcy but the interest rates will usually be higher. After you have demonstrated that you can repay your debts on time for a couple of years you will then be able to seek loans with cheaper interest rates. Some advisors will actually tell you that bankruptcy can increase your credit score because it eliminates your debt and allows you room in your budget for some additional credit. The key is the stay conservative and only use the credit you need.
There is no need for your employer to find out that you have filed for bankruptcy unless you choose to tell them. The courts are not required to notify your employer and it is against the law to fire an employee just because they have filed bankruptcy.
You do not have to be completely broke to file bankruptcy. You can still have a job and have money in a bank account and still file. The reason for filing bankruptcy is the fact that your debt is no longer manageable. When your monthly obligations exceed your monthly income you are eligible to file.
If you have to file bankruptcy you should realize that you are not alone. Many people across the country have been faced with bankruptcy because of the sudden economic downturn. Thousands of people have been adversely affected by the recession and you should not be ashamed if you find yourself in a position where you can no longer manage your debt.