The following bankruptcy facts will help you learn as much as possible about the process and help you determine whether filing bankruptcy is the right choice for you.

Unfortunately many people do not have all the pertinent bankruptcy facts at their disposal when they begin the process. It is critical to understand whether a bankruptcy is right for you and whether it is necessary in your case. Very often bankruptcy is seen as the only option to get out of severe debt but this is not necessarily the case.

Here are some important bankruptcy facts that will help you to understand the process and protect your consumer rights:

Bankruptcy Facts 1: Each state allows debtors, even under a Chapter 7 (liquidation) procedure to retain some of his assets. Creditors can only obtain repayment from assets sold that held by the court appointed trustee. Under bankruptcy law, your creditors will no longer be able to collect their debt from you, directly, or undertake legal action against you.

Bankruptcy Facts 2: Under a Chapter 13 bankruptcy your debts are paid via your future income and not your current assets. In other words you will be able to retain you personal property. You will present a repayment plan which will be reviewed by the court trustee, your creditors and the bankruptcy court.

Bankruptcy Facts 3: A Chapter 13 bankruptcy can only be filed if you have unsecured debts (usually credit cards) less than $100,000, and secured debts less than $350,000. These are home mortgages and car loans. Figures may vary in your state.

Bankruptcy Facts 4: Your repayment plan should repay creditors at least the same amount as under a Chapter 7 bankruptcy. Repayments are kept realistic based on your income and payments are made to the trustee and passed on to the creditors. The plan runs for three to five years.

Bankruptcy Facts 5: There are disadvantages to a Chapter 13 bankruptcy. The most important of these is that you will be placed under court supervision for the life of the plan (up to five years). During this time you will not be allowed to make new debts or sell assets unless you get permission from the court.

Bankruptcy Facts 6: If you cannot repay your debts in full you will be forced into a court-determined budget. Any extra money you have will have to paid over to your creditors.

Bankruptcy Facts 7: As far as taxes are concerned, filing bankruptcy under either Chapter 7 or Chapter 11 will stop all IRS or state tax collection efforts. However under Chapter 7, once the filing is completed the taxes are still due in full. Taxes cannot be discharged during a bankruptcy. Interest and penalties will also continue to add up. Under Chapter 13, however, tax collection efforts are stopped and can be paid during the three to five year repayment plan.

Bankruptcy Facts 8: Under Chapter 13 both spouses need to file for debts that have accrued during the marriage. If this is not done all debts are transferred to the other spouse.