When individuals or businesses cannot meet with their financial obligations, many make the assumption that the only solution is bankruptcy. That is not always the case though.

If the right steps are taken from the beginning, you can keep yourself and your family out of financial trouble and away from bankruptcy.

First off, start by educating your children. Many of us growing up weren’t presented with the tools and knowledge to establish and maintain good credit and keep away from the scare of bankruptcy.

With the new law passed in 2005 in regards to the filing of chapter 7 bankruptcy, it became law that anyone filing must first get pre-bankruptcy debt counseling.

The debtor must get counseling and certification from a non-profit credit-counseling agency before the forms can be filed for your bankruptcy.

This usually entails one or more counseling sessions and when completed, certification so you can proceed with the bankruptcy filing.

People considering bankruptcy have many questions regarding how future credit will be affected. Some think that it will be 10 years before they can get credit again, or that they will never get a credit card after their bankruptcy.

Common questions debtors have are usually about keeping current credit cards, establishing new credit and buying a home.

If money is owed on a current credit card, then it must be listed in your bankruptcy forms as a debt. These forms are filed under penalty of perjury and if fraud is detected, your bankruptcy case can be discharged.

While filing for bankruptcy, there are several codes, which an individual can file under. One such chapter is 13, which allows the debtor to keep property and pay the debt off over time.

The debt is usually paid over a three to five year period. This chapter is usually chosen by those who have a regular income and who do not wish to deal with the new laws of chapter 7 bankruptcy codes.

Also known as the wage earners plan, chapter 13 bankruptcies enable debtors to pay off part of the debt they have incurred.