There are many reasons someone may find themselves in enough debt to consider bankruptcy. While choosing to file for bankruptcy is a difficult decision, it's often one that can't be avoided. Here are three reasons many people use when choosing to file for bankruptcy.

1) They have an excessively high debt load. This can be from credit card debt, loans or even medical bills. Through a Chapter 7 bankruptcy with which the slate is effectively wiped clean or reorganization with a Chapter 13 filing, the person in debt can often benefit from the filing.

2) Many file to save their home from foreclosure. Filing for Chapter 13 bankruptcy will automatically stop a foreclosure on a home. The homeowner remains responsible for the amount borrowed, but the past due payments can be included in a repayment plan. The court must approve the plan however. In addition, many people use bankruptcy as a way to save their car and other property likely able to be repossessed.

3) Another common reason people file bankruptcy is when one or both workers in the home lose their job. In this case, they usually have financial obligations they can no longer meet. The typical person's lifestyle is guided by their income and with a sudden loss of employment it can be difficult to stay afloat financially.

Most debtors realize that they are financially in trouble well before they are filing for bankruptcy, but there are a few whose bankruptcy files showcase the fact that possibilities for avoiding this drastic step were not realized. Instead, a steady decline resulted in the dreaded filing and if the debtor had but pulled the fiscal emergency brake just a bit earlier, she or he might have avoided a long term mistake!

Here are some of the most commonly disregarded warning signs that - when observed carefully - may help you to get back on track:

Many people, in today's economy, find that they are falling beneath a mountain of debt. The reasons are many and some are through no fault of their own yet the outcome is the same. Debt continues to accumulate and possessions become threatened when the debtor is no longer able to pay the bills.

Accidents, unforeseen job layoffs and natural catastrophes can destroy a person's home, automobile and their job. As more people find themselves becoming unable to pay their debts, they are forced to undergo bankruptcy.

Unfortunately there are many myths involving the whole bankruptcy process but in this article many of the more common questions will be answered. Hopefully you will find the information and help you are searching for and so desperately need.

What types of bankruptcy are there?

There are four types of bankruptcy within the United States judicial system. Chapters 7, 11, 12 and 13, with each chapter covered under different guidelines and laws. The general breakdown of each chapter is all dependent upon the particular situation of the debtor.

Businesses typically file Chapter 11 whereas farm owners will file for Chapter 12. Under Chapters 11, 12 and 13 the debtor agrees to a plan where he or she will repay a portion of the debts back to the creditor. Chapter 7 is a complete liquidation and any assets obtained through secured debts are repossessed and sold. The remainder of the debt is discharged.

Is my home going to be foreclosed and sold?

When a person takes out a mortgage on a home it is considered a secured debt. That means if you cannot make the payments the bank can seize the property and then sell it. If you own your home without any mortgage, it is considered an asset and can also be seized by the courts as a way to repay part of your debts to your collectors.

Homes are most often the first thing sold as they are generally worth more and can repay more of the debt that is owed. There are ways to protect your home from being foreclosed but you have to seek the advice of an experienced bankruptcy attorney for help.

How long will my bankruptcy be on my credit report?

Bankruptcy can remain on your credit report for up to ten years from the date of filing. Once the bankruptcy has been discharged all of the reported debts will show as zero. It will have an impact on your credit score but not nearly as bad as it was before.

This is a golden opportunity to learn from your mistakes and learn how to manage your debts better. You will eventually be out from under the looming bankruptcy but staying out of trouble is an entirely different story. Many people do not learn from their bankruptcy mistakes and find themselves in the same situation repeatedly.

How do I deal with credit collectors?

Well... unfortunately ignoring credit collectors is not an option. Credit collectors can employ sneaky, underhanded methods of trying to collect their debts. They get paid when you pay your debt. If you have begun the process of filing for bankruptcy and have met with your attorney, any calls or letters you receive from a collection agency need to be directed to your attorney.

Once the bankruptcy process has been filed, debt collectors are not allowed to continue their threatening tactics. If they continue to do so you will need to file suit against them. New debt collection laws are in your favor if you are filing for bankruptcy. The laws do not apply if you are only considering the process.

Can a bankruptcy affect my job or future employment?

An employer cannot deny you a job based on the fact that you filed for bankruptcy. Many employers are now using credit scores and reports to make a decision on whether or not to hire a certain employee. Is this fair?

No, it is not but employers do have a say when setting forth their hiring criteria. If you feel that you have been denied a job based on your credit score or history of bankruptcy, you can file a complaint with the Labor board of your state.

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