Bankruptcy has a long history of release from debt obligations from the Biblical Jubilee, every seven years, through to the present time and codified in the United States Bankruptcy Code. Yet still there is a stigma attached and folks call me daily wondering whether or not to declare bankruptcy.

First let me start by stating that bankruptcy is defined as having more debt than assets, or anticipated assets. Thus an individual or company may be bankrupt without formally filing for a declaration of bankruptcy. The bankruptcy code is designed to provide some protection for those who are bankrupt, not decide who is and isn't bankrupt. Declaring bankruptcy isn't necessary or even desirable for everyone. If you do not own your home or have any assets that can be seized, you may not need bankruptcy filing protection.

Filing for bankruptcy comes with expenses for attorneys, filing fees and consumer credit education classes. Total costs can run between $2000-3000, depending on whether you are filing under a Chapter 7 liquidation or Chapter 13 repayment plan. Under Chapter 7 your debts are wiped out. Under Chapter 13 you will develop a repayment plan over a period of about 5 years. This is a generalized description of course, and not intended to replace the advice of a qualified bankruptcy professional as to your specific situation. But the expenses and time incurred are very real no matter your choices.

Some people don't need to file for bankruptcy protection at all. No matter how many times a creditor calls or sends a nasty letter, there are just some situations in which they cannot hurt you. The first situation that comes to mind is those folks on Social Security Disability. This money cannot be garnished for debt payments. If you rent your home instead of owning it, creditors cannot take it from you. The creditor may get a court judgment against you but there is nothing from which they may collect.

You can stop the harassment by simply writing a letter to each creditor and collection agency asking them to cease communication with you by telephone and mail. This is your right under the Federal Fair Debt Collections Practices Act. Again, the creditor may choose to pursue a court judgment against you but they cannot get blood from a turnip.

Please note that if you have assets such as a retirement fund, certificates of deposit, a motor home, or any other thing of significant value, these things may be garnished or have a lien attached as part of a court judgment. You should consult a qualified debt relief professional about protecting your assets. But if you are simply dirt poor with no assets of any kind, it may not be worth the time and expense to file for "protection."

As in all articles by Porter Law Office this information is not a substitute for legal advice. If you have questions about your specific situation you are strongly advised to contact a qualified debt relief professional for consultation and advice. Porter Law is licensed in the State of Kansas only.