The Bankruptcy laws in the United States were created to safeguard the interests of the borrower. They were created and occasionally revised by the Federal government and administered by various courts throughout the country. Latest statistics suggest that close to one million Americans are declaring personal bankruptcy a year. As economic times become gloomier and interest rates could go either way, this trend would appear to be on the rise. Generally people that file bankruptcy have two options open to them. They can file for chapter 7 or chapter 13 bankruptcy. In some cases, like if they owned a family business, they may even qualify for chapter 12. This article will give you some advice on whether to go for chapter 7 or chapter 13.

Declaring personal bankruptcy under chapter 7 essentially means that you can draw a line under your debts. However to fulfill the law you have to itemize all your assets and present them during the court proceedings. A trustee will be assigned to you who has the responsibility to liquidate all of these assets and divide the proceeds between those that you owe money to. Filing chapter 7 is allowed every 7 seven years and it will cost approximately $300 for administration and filing fees.

Declaring personal bankruptcy under chapter 13 is another way to deal with your debts however it works slightly differently to chapter 7. It does not cancel your debt but merely puts in place a system whereby you can pay back your creditors over an agreed time period. Chapter 13 personal bankruptcies assign a trustee, who will act as a go between between you and your creditors. A repayment schedule will be agreed in court that will be supervised by the trustee. This is generally done on a monthly basis but can be negotiated differently as part of a settlement. You give the agreed amount to the trustee each month and they distribute it accordingly to your creditors.

There are some conditions that have to be met before you can file chapter 13 bankruptcy. Not more than two hundred fifty thousand dollars and that debt can be unsecured. Debts that are secured should not be in excess of seven hundred and fifty thousand dollars.

The obvious advantage of chapter 13 is that you do not lose your assets but you still have to pay off your debts under a timescale that is more realistic.

Before you decide on the option that is best for you, be sure of the responsibilities incumbent on such a decision. Can you pay back the debts that you owe but need a little time ? Or is it impossible to pay back the debt ? In the eyes of financial institutions it is better to file for chapter 13 so this might be a consideration too. It is also better to pay off debts on a personal level and for society in general however you may not have an option if the debts are large.

If you are thinking about filing for bankruptcy it is important to understand the options that are available to you, visit http://www.bankruptcyfixup.com for advice, including bankruptcy chapter 7 rules explained . Adrian Whittle writes on ways to deal with debt and bankruptcy advice.

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