This website is called bankruptcy-alternatives-information.com
for one simple reason: we want you to research and
understand all of your bankruptcy alternatives.
That's why we encourage you to explore all possible
bankruptcy alternatives, including using
a budget to repay your debts on your own, debt
13 Wage Earner Plans, and consumer
proposals. It is only if all of these options
fail that you should consider personal bankruptcy.
What is personal bankruptcy?
Personal bankruptcy is a legal process where you
surrender some of your assets, and in return your
debts are discharged (which means written off or forgiven).
In the United States you can file personal bankruptcy
on your own, or with the assistance of a bankruptcy
attorney. Personal bankruptcy is also known as Chapter
7 personal bankruptcy. In Canada, personal bankruptcy
is filed through a licensed trustee in bankruptcy.
(Click on the links in the More Resources section
on the left hand side of this page for more information).
What are the advantages and disadvantages of personal
The most obvious advantage of filing personal bankruptcy
is that most your debts are discharged, meaning you
no longer have to pay them. The disadvantages of filing
personal bankruptcy include:
You may lose your assets - you can keep your
basic goods, such as your clothing, but in most places
in the United States and Canada you will lose a valuable
car or house if you go bankrupt.
Your credit rating will suffer - when you
file personal bankruptcy a note will appear on your
credit report for up to ten years depending on where
you live. This will make it harder to borrow in the
future. Lenders will require a higher down payment
or security deposit, and they may charge you a higher
rate of interest.
Filing personal bankruptcy should be treated as a
last resort, and only used if all other options are