If you are financially distress and it seems there is no way out in getting rid of your debts despite of trying other options you can decide on filing bankruptcy. Filing bankruptcy can relieve you of your debts through legal process. Bankruptcy law is complex in nature and one may need to consult an attorney before doing further move.

Your next move is to find and choose a competent lawyer in this field. In filing you can select between a Chapter 7 or a Chapter 13 bankruptcy. If you do not really have means to pay your debts, you can file under Chapter 7 bankruptcy. But under the new law before you can file under Chapter 7 you have to meet up eligibility requirements. Going under a “means test” signify that your present income is below the median income in your state. Remember laws vary from state to state and usually there is lots of paperwork to be accomplished.

Under the current laws, if you wish to file bankruptcy under Chapter 7 or Chapter 13 you must present proof of income supported by federal tax returns from year ending. If you are disqualified for filing under Chapter 7 you may then file under Chapter 13 instead. The difference between Chapter 7 and 13 is that in Chapter 13 the debtors go through into a five year settlement plan wherein they must pay

their creditors a definite amount based on a method of expense to income formula.

The bankruptcy decision will be documented in your credit history and stay there for seven to years based on the nature of bankruptcy obtained.

Reference:

Philadelphia Bankruptcy Lawyer

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