Let's consider Bankruptcy Chapter 7. Chapter 7 Bankruptcy allows families and individuals to erase many of the debts owed to consumers. Chapter 7 Bankruptcy will often erase medical bills, home mortgage, car payments, and credit card bills. The disadvantage with Chapter 7 Bankruptcy is that you will have to give up some of your assets in most instances. Once you fill out the appropriate papers you will then go into an 'automatic stay' which stops all your creditors from contacting you.

This means that the creditors cannot garnish money from your checks each month to apply toward the bills you owe. It also means that the creditors can not deduct money from your checking, savings, money market accounts and so on. You are also protected temporarily since the consumers are not allowed to discontinue your electric or gas. The advantage of Chapter 7 Bankruptcy is that you have a degree of control over all assets and income that are available once the bankruptcy is in motion.

There are debts that cannot be wiped out by filing Chapter 7 Bankruptcy. Those debts include child support payments, college tuition loans, criminal fines and costs, or other similar bills. The problem with filing bankruptcy is that new laws are coming that will make it more difficult for debtors to file. The new laws in motion are nearly prohibiting debtors from finding a solution. Another form of bankruptcy that is available is the Chapter 13 Bankruptcy. Chapter 13 Bankruptcy means that the debtor keeps their assets while making lower monthly installments on their belongings.