Sometimes people fall on hard times. Whether it is being laid off or having unexpected medical expenses, it is very easy to fall behind on payments. In these situations people struggle to pay bills and wonder if there is anything they can do to get some relief from creditors. In some instances, bankruptcy might be a consideration.

People often ask if they can keep their house or car if they file bankruptcy. It depends on several factors. Are you up to date on payments? How many vehicles do you have? What chapter are you filing under?

There are two types of bankruptcy available to most individuals: Chapter 7 and Chapter 13. There are some very important differences between these two types. Chapter 7 is asking for a complete discharge of debt. After a case is filed, creditors must stop all collection attempts. If you were receiving bills or phone calls, they should cease. Any lawsuits filed against you should stop, as well as garnishment of your wages.

There are some types of debts that are not dischargeable in Chapter 7 cases. These types of debts include taxes, child support, alimony, student loans, court-ordered fines and restitution, and debts obtained through fraud or deception.

There are many factors to consider when determining if bankruptcy is the right course of action and which chapter to file under. Chapter 7 cases are easier, faster, and cheaper than Chapter 13 cases. However, sometimes a Chapter 13 case is what a person needs.

Chapter 13 is essentially a debt consolidation plan. This is designed for individuals with regular income who would like to pay their debts in installments over a period of 3-5 years. This type of bankruptcy is often referred to as “debtor's court.” Reasons for filing a Chapter 13 case include attempting to stop foreclosure on a home, attempting to stop repossession of an automobile, stopping liens or garnishments, disconnection of utilities, and stopping lawsuits, among others.

Almost all types of debt can be included in a Chapter 13 case, including past-due child support and alimony, student loans, past due utility bills, medical bills, and credit card debt to name just some of the types of debt. Under a Chapter 13 plan, individuals make payments to the bankruptcy trustee who then distributes the money to creditors.

If a person does not make the required payments, he or she will not receive a discharge and the case will be dismissed. Once that happens, the person's creditors may come back and attempt to collect the money owed them plus interest. If you file a Chapter 13 bankruptcy case and do not follow it through to conclusion you might be in worse shape than when you started. You need to really think before filing bankruptcy.

If you are considering bankruptcy, sitting down and discussing your finances with an attorney can give you better guidance on whether bankruptcy is right for you.