The last option for someone in financial trouble is Bankruptcy. Options such as Debt Settlement and Credit Counseling should be attempted first. The two types of bankruptcy for individuals are Chapter 7 and Chapter13. All bankruptcies must be handled by an attorney.

Some debts are not dischargeable through bankruptcy. Among these are taxes, student loans, child support, and criminal fines. A bankruptcy attorney will be able to help the consumer sort through what is eligible.

Chapter 7 bankruptcy absolves the consumer from any debt filed under it. Meaning that once the bankruptcy is discharged, the client no longer owes the debts listed. All unsecured debts can be discharged this way, but the debtor may lose property not exempt by law. Items such as homes and vehicles can be retained, an attorney will help inform the consumer what can be kept and what cannot. A chapter 7 bankruptcy will remain on a credit report for ten years.

Chapter 13 bankruptcy involves the reorganization of debts rather than discharge. Again, A bankruptcy attorney will be able to help the consumer to decide the best path.

Recently, the federal bankruptcy law changed, limiting eligibility for chapter 7 and providing a “means test” to determine eligibility before individuals may file. In addition, the new law requires that a consumer attempt to discharge their debts through a credit-counseling program, as well as changing the nature of a bankruptcy settlement so that an arrangement is made for monthly payments toward some unsecured debts.