How to go bankrupt

Nowadays filling for bankruptcy has become a common thing, and more and more people that can not pay their bills are filling for bankruptcy.

There are many situations that make you ponder the possibility of going bankrupt. It could be that you lost your job in the current economic downturn, that you got divorced and can no longer afford the payments on the mortgage by yourself, or maybe your monthly mortgage rate increased. It could even be that you had the unfortunate luck of becoming ill.

After looking at the reasons that might make you go bankrupt, make sure you explore all other options before filling for bankruptcy. The decision to go bankrupt should be regarded as a last resort option.

Before filling for bankruptcy make sure you explore all of your other options to avoid making this decision. There are certain changes you can make to your life, or steps you can take, to avoid going down the bankruptcy route:

• Sell off some assets - One of your first options to consider before even thinking about filling for bankruptcy should be to sell off some of your assets. A second car, the mountain bike, unused exercise equipment, the pool table, or an old collection you no longer have interest in. These are just a few of the examples of things you can sell to make some extra cash and give you some breathing room.
• Reduce expenses - While selling off stuff is always a good short term solution, to permanently solve your financial problems you need to reduce your monthly living expenses. Setup a monthly budget and control your expenses to see where your money is going and to find out where you can reduce some of the "fat" from your budget.
• Increase your income - Another great alternative to help avoid a bankruptcy filling is to increase your monthly income. Consider getting a part-time job or picking up some extra hours at work. You can also look for odd jobs in your local neighborhood as a way of increasing your income.
  

Now that we have looked at some of the measures you can employ in order to avoid going bankrupt, lets look at the options available to your if you decide that the best route to follow is to go bankrupt.

Types of bankruptcy fillings:

• Chapter 7 Bankruptcy - If you go bankrupt using a Chapter 7 filling all your assets will be liquidated and the proceeds will be used to repay your loans. Any amount that is not paid from the resulting sale of assets is discharged and the creditors have no further right to that amount. Depending on your State of residence, certain assets, such as a home and car are protected and can not be sold off to repay your creditors. Recent changes to the laws have made it much harder for you to file for a Chapter 7 Bankruptcy and you need to meet certain criteria.
• Chapter 13 Bankruptcy - This type of bankruptcy implies a restructuring of your loans, usually accompanied by a reduction in the loan amounts, that will allow you to repay off the loans in a 5 year period. In order to file for a Chapter 13 bankruptcy you must have a regular monthly income that allows you to repay of the loans. Once the period is over, and you repaid the agreed amounts, you are discharged from any further obligations.