by E.L. Miller

Created on: January 19, 2009   Last Updated: January 31, 2009

Bankruptcy is not a dirty word. It exists as a means to provide a financial "fresh start" for consumers and businesses experiencing financial hardship that seriously affects their ability to function and thrive. It is not an easy way out of credit card liability or responsibility for debt, but an opportunity for somewhat of a clean slate. Its purpose is to provide a means for those overwhelmed with debt and out of options to begin anew and regain self-sufficiency. Bankruptcy is often a last resort, but a much smarter option than suffering in vain until complete financial ruin.

Recent laws have made changes in the process of filing for bankruptcy, but contrary to popular belief, have not made it more difficult for consumers to file for bankruptcy protection. While the paperwork is a bit more intensive, most of the process has not changed. For the most part, the preparer of the petition just has to do more legwork before filing, so consumers are encouraged to gather all of their current financial records to aid in a seamless and speedy filing.

Individuals usually choose between a Chapter 7 or Chapter 13 bankruptcy filing, referring to the chapters of the Federal Bankruptcy Code under which their case falls. Chapter 7 bankruptcy, often referred to as liquidation, does not require repayment to any unsecured creditors, or those who do not have claims to any of the debtor's property. Chapter 13, which is commonly known as debtor's court, or the wage-earner's plan, is a restructuring of debts, which usually requires at least some repayment to unsecured creditors.

Bankruptcy attorneys offer advice to potential filers as to which plan to file, whether it is the only of the chapters the debtor qualifies for, or the one most beneficial to the debtor. Though it is possible for a consumer to file a bankruptcy pro se, or on their own, or even with the assistance of only a bankruptcy petition preparer, it is recommended that people considering bankruptcy seek the advice of a bankruptcy lawyer. In addition to advising on which chapter to file under, there are many post-filing occurrences and other possible events that benefit for legal assistance.

In bankruptcy, regardless of which chapter, the debtor (or if a joint filing for married couples, both debtors) must list all creditors, regardless of the intentions for the debts. Debtors may choose to reaffirm debts, meaning they keep or renegotiate the debt with creditors, rather than lose property secured by the debt. They may redeem

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