It should not be a stigma, nor should you feel guilty, if at some point in your life, you find that you must avail yourself of the U.S. bankruptcy laws. They are intended to protect individuals from creditors. Many very bright and successful people have utilized this option. Very often, finding yourself in need of bankruptcy protection, is the result of conditions outside your control. All of the forms of Bankruptcy are intended to give people a fresh start.
There are three bankruptcy options, they are: Chapter 13, wherein you develop a plan to partially satisfy your creditors with a payment plan over many years. Chapter 11, a form of bankruptcy primarily for businesses to reorganize. Chapter 7, the type of bankruptcy wherein you can discharge most or even all of your debts entirely.
Filing for bankruptcy puts an immediate and automatic stop on your creditor's collection attempts. In a Chapter 7 filing many of your debts will be canceled without any further repayment. in some cases, this can include some taxes you might owe.
In some cases you may have to surrender some of your "non exempt" property. Property that is exempt and need not be surrendered would be some motor vehicles, clothing, household furnishings, pensions and life insurance policies.
However, be careful, even bankruptcy requires prudent planning. I have seen too many people rush out and file bankruptcy too soon without proper guidance, only to still lose their homes, property, everything and still on top of that they often still owe taxes and have undischarged debts.
With advanced planning, asset protection can provide a structure where even after bankruptcy, some assets are still intact for the benefit of your family and loved ones. And, with very good planning, we can make sure you walk away not owing the IRS or the state anything! Again, remember that timing is critical, all planning must be done as early as possible.
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