Looking at the bulk of filings, merely seriously considering personal bankruptcy is enough to panic someone so much that they will panic and be afraid to face their financial troubles. Regrettably, statistics indicate that approximately five people out of every thousand have found themselves declaring personal bankruptcy and even more distressing, this number is rising. Additionally, reports from research corporations indicate that the primary reason that people are filing for personal bankruptcy is due to excessive spending which accounts for extreme debt. If these same individuals then experience the financial weight of unplanned and unexpected circumstances this can throw their monetary resources into total disarray.
There are numerous grounds why an individual may file for bankruptcy. Losing a job or going through divorce procedures are common as is the death of a spouse. Each of these have the possibility to indicate disaster for your finances. The average person that selects to file for bankruptcy is usually one who has graduated from high school, is a blue collar employee, and is also the head of the household, even though they are in all probability in the class of lower middle income. At the same time this individual is also going to have stretched their monetary resources too far and will have depended heavily on credit in the past.
Laws presently are in place that work to protect both the creditor and debtor and such laws exist to ensure that those individuals who are honest suffer as little as possible due to their financial mismanagement. The same laws likewise offer protection to the creditor and helps them to recover any funds they are owed.
If you are considering filing for personal bankruptcy there are two alternatives open to you. The first is that you can choose to file for Chapter 7 bankruptcy. The second option is Chapter 13 bankruptcy and both are notably different. Chapter 7 bankruptcy requires all of your assets (that are not exempted) to be auctioned off and the proceeds of these assets will be dispersed amongst your creditors to fulfill the debt owing to them.
Chapter 13 bankruptcy is a slightly gentler option in that it does not expect any elimination of your assets. It does however require you to reorganize your debt load in such a way that you are comfortably able to pay off the debts over a timeframe of between three and five years.
One of the factors that many individuals do not consider, however, is that the option of which chapter to file is not their decision. This is a decision of the courts, who will give that decision after a careful review of your detailed financial information. It is because of this that a bankruptcy lawyer is strongly recommended so your information can be exhibited in the right format.
But, concern exists amongst numerous financial analysts who regard personal bankruptcy as a serious menace to the wellness of the economy and there is just reason for this. The number of consumers who file for personal bankruptcy is rising causing a distressing trend. In turn this has led to some drastic measures being taken.
Only recently, in March 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was presented and this forces people who file for personal bankruptcy to accomplish a number of tests on the status of their income and to stick to tighter regulations before they are allowed to declare this type of bankruptcy.
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