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      How bad is bankruptcy?

      Some people fall into bankruptcy when they have an inability to pay their debts as they become due. But what does filing for bankruptcy do to your credit?

      According to attorney Russell Hall, there are between 700 to 1,000 bankruptcies filed a year in the U.P. He says most of the time it's necessary because there's no way these people can pay off the debt.

      So what's the most common reasons behind it?

      ??Really, the two major areas that I see are uninsured medical costs and credit card debt that people can't pay back," says Hall.

      Chapter 7 Bankruptcy is a liquidation bankruptcy. The goal is to wipe out your debt. Chapter 13 Bankruptcy is similar to a forced repayment of your outstanding obligations.

      Hall says if your credit is already very poor, filing for bankruptcy won't really have a negative affect on your credit score. Sometimes filing can benefit a person because they have all their delinquent debt off their credit report.

      If you have to file for bankruptcy, be prepared to hunt down paperwork. You??ll have to bring all your bills, lawsuits pending against you, and your tax information.

      There is a tip on avoiding this scenario altogether.

      ??I think the first thing is to evaluate and see how much debt you have, and also look at your cash flow. Sometimes credit card companies will be willing to negotiate a reduced payment,?? Hall explains.

      Experts say most people see improvement within a year of having to file for bankruptcy.