Not sure what to do..........

Hi jmarpate -

The choices in bankruptcy are this determined by a means test, which will be performed by the attorney. The attorney will take all of your information (income, debt, assets, etc.) and perform the means test on them to see what area you fall into. This is what will happen:

Chapter 7:
If you do not make enough to pass the means test to file Chapter 13, you will file Chapter 7, which means all of your existing debts will be wiped out, giving you a fresh start.

however...

Chapter 7 means the Trustee is bound by law to SELL any of your assets that are worth much of anything (house, cars, etc.) in order to pay as much of your debts as possible before discharging the rest. Every state has an exemption on your belongings up to a certain amount, but I would say with 2 cars, boat, ATV's, etc....you will lose most of that. If you have jobs, though, chances are good that you will be filing Chapter 13, not Chapter 7. You may CHOOSE to file Chapter 7, but all of what I said above about items being sold by the Trustee will apply - by law, the attorney and Trustee must enforce the sale of these items to pay back at least a portion of your debts before the rest can be discharged.

Chapter 13:
This is called the "wage-earner" plan, and unless you are unemployed, laid off, or disabled, or don't care about losing your posessions, you will end up in this plan. This is a debt repayment plan, wherein your debts will be repaid over a period of 3 to 5 years. The attorney & the Trustee will develop a payment plan that will take your "disposable income" (determined by THEM, not you!), and repay your debts with it. Be advised the attorney will receive his fee - a sizeable one - first. Your debts, including your house payment, if it's in the plan, will not begin to be paid on until the attorney's fees are paid. You will be left living on what is left of your income after the plan payments come out of your paycheck, which can sometimes make life very difficult. Your old bills are included in the plan and are being paid...but you always acquire new ones. New medical bills, car and home repair bills, vet bills, etc. So your problem is NOT solved....it just got bigger.

Now, I am not saying that bankruptcy should NEVER be considered as an option - sometimes it is the only option available. If you need to save your home from foreclosure, which is the case so often these days, or if you have lost your job and have no way to repay your debts, then yes, you have every reason to consider bankruptcy as an option. But it has a very long lasting harsh effect on your credit, and is a life-altering experience.

Another word of advice - be careful about selling off any assets too close to the bankruptcy filing - I'm not sure what effect that will have on it. I know debts incurred just prior to bankruptcy (say within 60-90 days of filing) are sometimes not dischargeable - the sale of a valuable asset like a home may also cause some problems.

You also have to be very careful about selling anything of real value such as property close to filing for bankrutpcy as this can come back to haunt you. I know first hand about that. Go talk to a reliable attorney for all of your questions.

ladybug

why do u want to declare yourself bankrupt? Why do not u consider going through a debt settlement program?