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Helpful information about personal bankruptcy for DC residents

Credit card debt, mortgages and personal loans have one thing in common, they can cause financial hardships if debtors fail to pay them. Debt moves the economy and almost all people in the Washington D.C. area and throughout the United States rely on some form of debt to start a new business, obtain higher education or purchase a house. When debtors fail to settle these debts, creditors will use all means possible to make them pay. This can result in foreclosure if a house has been used as collateral or a poor credit rating due to failure to settle debt.

To obtain a clean slate, debtors can use a number of options, such as personal bankruptcy. Before debtors file for bankruptcy protection, they need to undergo credit counseling and debtor education. It is important to check the U.S. Trustee Program list to determine which credit counseling organizations are accredited by the federal government. Credit counseling must be done before a person files for bankruptcy.

Once the debtor has filed for bankruptcy, that person must be educated about how to avoid debt in the future. Counseling begins with evaluation of a debtor's finances to help determine which type of bankruptcy best fits their needs. Counseling is often free of charge especially for those who cannot afford to pay. In some cases, counseling may cost about $50, depending on where the debtor lives.

Individuals can choose between Chapter 7 liquidation and Chapter 13 bankruptcy. Federal courts will only grant Chapter 13 bankruptcy to those who have stable cash flow. Liquidation, on the other hand, is a viable option for those debtors who wish to sell assets to settle their debts.

Readers who have more questions pertaining to bankruptcy protection may speak with a bankruptcy attorney to help better understand their situation and options that may help them obtain a fresh financial start.

Source: Ftc.gov, "Filing for bankruptcy: what to know," Accessed on Feb. 12, 2015

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