Bankruptcy is a legal proceeding in federal court in which a person who is struggling to pay his or her bills can get a fresh financial start.

Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

Depending on the type of debt and your situation, bankruptcy will eliminate a debt or allow you to repay any delinquency at a low rate of interest over an extended time.

There are 4 types of bankruptcy:

Chapter 7 (referred to as straight bankruptcy)

Chapter 13 (referred to as a repayment plan)

Chapter 11 (reorganization used by wealthy persons and corporations)

Chapter 12 (intended for family farmers and fishermen).

Almost all people in El Paso who file bankruptcy file under Chapter 7 or Chapter 13.

How do I decide Whether Chapter 7 or Chapter 13 Bankruptcy is best for me?

In a Chapter 7 Bankruptcy, you pay creditors out of non-exempt property owned at the time of filing.

In a Chapter 13 Bankruptcy, you keep all assets owned (even those that are not exempt under Chapter 7) at the time of filing and pay creditors out of future income over 3 to 5 years.

Bankruptcy is the real deal. If you qualify for federal law bankruptcy relief, you are entitled to tremendous protections for your property and peace of mind.

However, there are alternatives that are worth comparing to bankruptcy.

They are budgeting, making more money, credit counseling plans, home equity loans, and borrowing money from your retirement account.