Filing Personal Bankruptcy

What is personal bankruptcy?

Any bankruptcy case filed by an individual or couple (joint bankruptcy) is considered to be filing personal bankruptcy.

Unlike business bankruptcies, personal bankruptcies can be filed without the expense of hiring an attorney. This allows you to fill out your own personal bankruptcy forms and deal directly with the bankruptcy trustee in your state and district.

Small business bankruptcy is usually considered to be a personal bankruptcy filing if it is a sole proprietorship or a partnership that is not incorporated and functioning as a DBA company. Many personal bankruptcies are in fact small business bankruptcies that go unreported. This skews the reporting of small business bankruptcies dramatically and inflates the number of personal bankruptcy filings.

While their are 5 different types of bankruptcy, chapter 7 and chapter 13 encompass nearly all personal bankruptcy filings. The most common personal bankruptcy cases are filed under chapter 7. Under the new bankruptcy laws, chapter 7 personal bankruptcy cases are allowed after the successful completion of a bankruptcy means test.

While this test was introduced as a mechanism to force more people into a chapter 13 re-payment plan, very few people wanting to file a personal chapter 7 are not able to do so.

Chapter 13 bankruptcies also require a statement of current monthly income test to determine if your repayment plan will be 3 years or 5 years. Personal bankruptcy filer's with a higher monthly disposable income will be forced into a shorter pay back period that filer's with a lower monthly income threshold.

A short slowdown of personal bankruptcy filings were reported after the new laws went into effect on 10/05. Since then bankruptcy filings have increased every month and are expected to reach record levels by mid 2008.

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