Understanding the operation of declaring personal bankruptcy is necessary if you are thinking about filing for bankruptcy to help you avoid paying credit card debt and other bills. Even though there are several types of personal bankruptcy, this article will mainly focus on chapter 7 bankruptcy, which is considered to be the most common. Although there is no law that states you have to declare personal bankruptcy as a way to wipe out your debts, most people feel this is the best way to avoid spending years in court. If you are seriously considering declaring bankruptcy, it’s important to know what kind of debts you can be declared for and what debts cannot.
First, you need to understand that there are two types of personal bankruptcy: voluntary and involuntary. Voluntary bankruptcy is when you file for it yourself and do not seek any type of outside help to declare personal bankruptcy. Involuntary personal bankruptcy occurs when you ask a third party to help you declare personal bankruptcy. If you are declaring bankruptcy on your own, you will likely only be able to declare debts with interest that are in your range, though some lenders may still try to garnish wages or properties that are not exempt from bankruptcy.
One thing to keep in mind before declaring personal bankruptcy is that people who have large debts and do not own property to use as collateral often cannot successfully declare. If you are faced with a large amount of debt and do not own any assets to use as collateral, you should first take a look at your other options and exhaust all of your options prior to declaring. You should also try and speak with a bankruptcy lawyer to see what options are available to you. This is especially important if you are facing a very serious financial predicament.