1. November 2, 2011 Objective: Students will identify the purpose and reasons to avoid bankruptcy.

2. Stigma  Think of bankruptcy like divorce—no one thinks this is a great idea. Even though they do everything possible to avoid it, sometimes good people have to go through it.  Even quality bankruptcy attorneys will tell you it is a last resort. The fear, the shame, the guilt—it turns your world upside down.

3. Types of Bankruptcy  Chapter 13 means the court approves a plan for you to repay your debts over time.  Chapter 7 means the court sells your assets in order to pay back as much as possible, with some exemptions that vary state to state, to allow you to keep some personal items and maybe some home equity.  But keep in mind bankruptcy doesn't completely wipe the slate clean because in most cases you can't eliminate child support, alimony, taxes, and student loans.

4. Legal Changes  During the week of September 20, 1998, the US Senate agreed to debate a bill (S 1301), intended to make it more difficult for people of means to use bankruptcy to walk away from debt.  Those who could pay at least 20 percent of their unsecured debt would be steered by judges to file for Chapter 13 bankruptcy, which entails some repayment.  They no longer would qualify for Chapter 7, which requires little or no repayment.

5. Explore Every Option  Bankruptcy should always be a last resort! Explore every option first:  Selling the car  Taking an extra job  Living on a budget  Having a garage sale  Scale back… quit paying this or that most  There may be some dings on their credit but its better than filing bankruptcy.