If you are thinking about filing for personal bankruptcy, then there is a lot of details you need to know. Here is everything you need to know before you take the plunge, so you know you are making the correct decision for your finances.

First, you should answer some questions to determine if you are in a financial crisis. These questions include:

1. Are debt collectors calling your regularly?

2. Do you have a history of only making the minimum payment on your credit cards?

3. Do you feel out of control when it comes to budgeting and balancing your check book?

4. Do you use your credit cards more than you are comfortable with?

5. Have you thought about entering a debt consolidation service?

6. Do you not know where to start?

If you have answered yes to the majority of these questions, there may be a good chance you need some help with your finances.

What is bankruptcy?

Simply put, personal bankruptcy is when you owe more money than you have. In order to determine what you can and cannot afford, it is important to consider all of your liquid assets. This includes your retirement funds, stocks and bonds, vehicles, mortgages, and college saving accounts. Then, take into account your weekly income and your credit card statements. If the value of your assets is less than what you owe, then you are a candidate for a bankruptcy case.

What are the different types of bankruptcy?

There are different bankruptcy issues that come with each case. They are as followed:

Chapter 7

This form is when you liquidize your assets in order to pay off as much debt as possible. Then the profit from these assets is given to your creditors and debt collectors. When you file for this type of bankruptcy, it will stay your credit report for 10 years.

Chapter 13

This form of bankruptcy is for those who have property they would like to keep as their assets. Because of this, bankruptcy mediation may be required to determine an agreement between you and your credit lenders. Typically, you will be able to pay off your debts in either three or five years. For those who have a steady income, this form of personal bankruptcy is a great method as it allows for a grace period that will help you get your finances in order.