In this tough economy, many people are struggling to pay their bills, and there is a lot of fear about losing homes among those who have lost employment or had hours cut back.

It seems that almost everywhere you turn, there are advertisements about “eliminating your debt.” It’s time to sort out the fact from fiction regarding debt relief and filing bankruptcy. The option you choose can impact your life for years to come.

Bankruptcy laws vary from state to state. Some laws may be similar between states; however, if you are thinking about undergoing any sort of bankruptcy, consulting with a local attorney is important. Specifically, the experts in this field are bankruptcy attorneys. These professionals are best equipped to educate you about local laws and regulations as well as assist you in figuring out the best course of action for your unique situation.

Many people who desperately need debt relief are concerned about the social stigma of debt relief, fearing that the news of their bankruptcy will be widely published. In the case of celebrities and public figures, this is nearly unavoidable and thus a legitimate issue. For the rest of us, though, few people outside the affected creditors ever become aware of the proceedings.

If you go through some form of bankruptcy, will this eliminate all your debts? Your attorney can determine whether your financial circumstances meet the current means test for making debt repayments through Chapter 13, a wage earners plan, or if a Chapter 7 filing is more appropriate for you. Both the Chapter 7 and Chapter 13 filings contain many types of debt elimination exclusions such as child support, criminal restitution, and tax liens.

Another misconception about bankruptcy is that you will lose your house when you file. Both Chapter 7 and Chapter 13 forms of bankruptcy often allow you to keep your current home. Sometimes Chapter 13 filing actually is initiated to help homeowners prevent foreclosure. In order to protect your assets, including your home, to the full extent of the law, you certainly want an experienced bankruptcy lawyer advising you and handling the filing of either Chapter 7 and Chapter 13 proceedings.

Some people may find it necessary to file bankruptcy in a state other than the one they live in. This sometimes happens when the debt was incurred in another state, or when they recently moved. It is now required for you to be a legal resident of a state for two years before you are eligible to use that state’s exemptions. Consult with an attorney in the state in which your debts were incurred before changing jurisdictions.

Regardless of the claims you hear on TV, radio, or on the internet, debt relief, whether settling your debts with creditors through negotiating down the balances, or filing for some form of bankruptcy, will impact your credit score. It is fiction that after filing a bankruptcy, your reduction in debt will improve your credit score. The credit bureaus maintain records of all your credit transactions, some for 7 years, some for as long as 10 years. Your credit score will drop, perhaps significantly, after a bankruptcy is filed, and most creditors will show negotiated credit payoffs as “PAID SETTLED” which will also lower your scores.

This doesn’t mean that any future credit opportunities are doomed after bankruptcy. It isn’t unusual that shortly after discharging your debts you will receive new offers for credit cards again. You can expect it to be much more difficult, if even possible to qualify for property and automobile purchases. If you do qualify, it is likely your rates and terms will be less favorable.

If you do find yourself in a situation where either restructuring or debt relief of some kind is absolutely necessitated, it is strongly recommended that you work with an experienced attorney who can help you understand your options. Your credit score can be improved over time.

Considering bankruptcy in the Detroit, Michigan area? Call on A Better Way Bankruptcy.