Bankruptcy

Hi Enigma,

Welcome to Mortgagefit forum.

If your debt burden increases to such a level that you are not in a position to repay them then you can file for bankruptcy. It is a legal procedure by which you can pay off your debts as per the guidelines provided by the bankruptcy court supervising your case.
"what is the proceedure to file a bankruptcy??"
Before filing bankruptcy you will be required to undergo a means test which is used to determine which type of bankruptcy you should file.

In addition if your salary is more than the median income level then you will have to go through a credit counseling session before filing bankruptcy to check if you are in a position to pay off a certain percentage of all the debts and thus won't need to file bankruptcy.

Colin

First of all one needs to go through credit counseling at least 6 months prior to filing date. The counselor will judge if the debtor can pay off 60% or more of the total debt. If he is capable of doing it, then he does not need to file bankruptcy. Otherwise, he needs to go through Means test which will determine whether he'll file Chapter 7 or 13.

You may refer to the section on Means Test for more information on this issue.