Bankruptcy is a means for an honest debtor to get a fresh start. Bankruptcy is frequently the most effective way for you to escape your financial hardships and it is something that you ought to only consider if you can no longer afford to pay your existing debts. Keep in mind that there are many different types of bankruptcy. However, for consumers, the most commonly filed type of bankruptcy is either a Chapter 7 or a Chapter 13 Bankruptcy. Technically speaking, a Chapter 11 is available for a high net worth individual, but the overwhelming majority of individuals don't qualify for a Chapter 11. Chapter 7 is the most typical form of bankruptcy filed by individuals. It is typically referred to as a "straight liquidation." The debtor can exclude property from the bankruptcy estate using the applicable exemptions. Any non-exempt property is sold to proportionately satisfy the outstanding debts. Then the debtor is then released from all repayment obligations excluding certain items including Federal, State and Local taxes in addition to Student Loans. Speaking to a qualified bankruptcy attorney is important so as to see what property you have that could be exempt and what debts can be discharged. While a Chapter 7 can provide you with an immediate fresh start in repairing your finances, it remains on your credit report for 10 years. Notwithstanding the blemish on your credit report, many people find that 1 year after filing for bankruptcy, their credit score has increased. In addition to the the increase in credit score, many creditors view someone who has filed for bankruptcy as being a better credit risk because of the prohibition against filing another Chapter 7 for a long period of time. Chapter 13 is less harmful to your credit. A Chapter 13 is primarily used by individuals with any one or all of the following: 1) above median income for his or her family size; 2) an owner of real property attempting to stop the foreclosure process and/or 3) an individual with non-exempt property, that would be sold in a Chapter 7 Bankruptcy, which the debtor would like to keep. There will still be a negative item on your credit report for filing a Chapter 13. However, the consequences usually are not as severe in comparison to a Chapter 7. Much like a Chapter 7, many individuals see their credit score increase over time while completing their Chapter 13 plan. With a chapter 13 you will be able to keep your house and they won't start selling your assets to pay back your creditors like you would in Chapter 7. As an alternative to liquidating assets the debtor is permitted to pay the Chapter 13 trustee the value of the non-exempt property over a period of 3 to 5 years. In 2005 an act commonly known as the "2005 Bankruptcy Reform Act" was implemented that had the intent to make it more difficult for individuals to file for a Chapter 7 bankruptcy. The reality of the situation is that most people who had filed for a Chapter 7 would still be eligible for a Chapter 7 under the current rules. The practical effect of the 2005 Bankruptcy Reform Act appears to be simply an increase in the total amount of paperwork that must be prepared by a Bankruptcy Attorney. The only real substantial difference to a debtor is that a debtor is required to finish a pre-filing credit counseling course and also post- filing financial counseling course in both a Chapter 7 and Chapter 13 Bankruptcy. It is very important that you consider the differences between a Chapter 7 and a Chapter 13 Bankruptcy. You need to decide which one will assist you to realize your objective. A knowledgeable consumer bankruptcy attorney can help you determine what course of action is best for your specific situation. The Law Offices of Michael A. Dye, P.A. is a consumer bankruptcy law firm located in Fort Lauderdale, Broward County, Florida. The law firm is a debt relief agency and helps indiivduals file for relief under the United States Bankruptcy Code. For more information, please call, (954)745-5848 or visit http://BKBroward.com.