“The right time to go bankrupt is when you’re financially, stuck but still have assets to protect,” Newsweek financial columnist Jane Bryant Quinn tells her readers.  “If you are reaching the end of your rope, don’t try to hold on.  Save what you can.”

Saying she normally would tell readers to “suck it up, cut spending and repay your consumer debt,” this year she is risking her “good-girl reputation with a subversive idea:  go bankrupt in 2009″.  It is not always possible to pay debt “especially with an economic tsunami rolling over your home, job and health insurance.”Continue Reading

In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years.  The most important thing about a chapter 13 case is that it will allow you to keep valuable property–especially your home and car–which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors.

In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.

You should consider filing a chapter 13 plan if you:Continue Reading

In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts.  The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for “exempt” property which the law allows you to keep.  In most cases, all of your property will be exempt.  But property which is not exempt is sold, with the money distributed to creditors.

If you want to keep property like a home or a car and are behind on the mortgage or car loan payments, a chapter 7 case probably will not be the right choice for you.  That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.

If your income is above the median family income in your state, you may have to file a chapter 13 caseContinue Reading