Your attorney can help you figure out what you need to do so that you can be debt-free. A Chapter 7 bankruptcy can eliminate your debt fairly quickly. However, this type of bankruptcy also usually wipes out all of your assets as well. On the other hand, a Chapter 13 bankruptcy allows you get rid of most of your debt within 3 to 5 years.

So Chapter 13 is likely the best choice for someone facing a foreclosure, but each individual has a different situation and the unique characteristics of the situation should be considered before making a final decision.

You are not a deadbeat if you file for bankruptcy. Most people file for relief after a life-changing experience, such as a death of a spouse, divorce or job loss or after a serious illness that left them with thousands, if not tens of thousands, of dollars in unexpected medical expenses. Even after the new bankruptcy law went into effect, out of 60,000 filers who were required to go through credit counseling first to pre-qualify, only about 3% didn't qualify for relief. Most people qualify and need to seek bankruptcy protection.

Depending on your situation and your debts will depend on whether you file for chapter 13 bankruptcy or for chapter 7 bankruptcy. Either one can be very helpful when you are so far in debt that any other option will not help.

Usually, a debtor who files Chapter 13 is employed and is looking to hold on to his assets while creating a payment agreement with the bankruptcy court to help pay off his creditors. The individual will make a Chapter 13 plan, where he agrees to make timely payments to the Court for a period of three to five years. This should ensure the debtor enough time to pay back the agreed upon debts.

If you are not familiar with this type of bankruptcy, it is different from Chapter 7 in that rather than wiping out the debt as in Chapter 7, there is a restructuring of debt. If it is an individual doing the filing, it allows that person to retain their assets, and it provides the relief from collectors needed for a period of several years in order that the individual can get back in good standing financially. In either type of bankruptcy, the individual is required to file a petition, or declaration in the local court. This is a complicated document, and it is therefore highly recommended that a bankruptcy attorney be retained. A specialized attorney who deals with the bankruptcy courts on a daily basis has the resources to handle the case much easier than an individual with no prior court experience.

Here, it is worth noting that a debtor cannot get any restitution balance discharged even on the completion of a Chapter 13 plan. Suppose, if a debtor owed criminal restitution payments in the amount of $50,000 and they could only pay $20,000 within the time period set by the Chapter 13 plan. In that case, the debtor will still be liable for the payment of the remaining $30,000.