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A decision to file for bankruptcy should be made only after determining that bankruptcy is the best way to deal with your financial problems.Although it may be possible for some people to file a bankruptcy case without an attorney, it is not a step to be taken lightly.The process is difficult and you may lose property or other rights if you do not know the law.Chapter 7 (straight bankruptcy) cases are somewhat easier.Very few people have been able to successfully file chapter 13 (debt adjustment) cases on their own.
Remember: Bankruptcy is a complex body of law.The law changes often and the information on this website is only meant to give you general information and not give you specific legal advice.
What Is Bankruptcy?
Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start.The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court.Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.
What Can Bankruptcy Do for Me?
Bankruptcy may make it possible for you to:
Eliminate the legal obligation to pay most or all of your debts.This is called a “discharge” of debts.It is designed to give you a fresh financial start.
Stop foreclosure on your house and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)
Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
Restore or prevent termination of utility service.
What Types of Bankruptcy Cases Should I Consider?
There are several types of bankruptcy cases provided under the law. The most common are as follows:
Chapter 7 is known as a “straight” bankruptcy or “liquidation.”It requires an individual to give up property which is not “exempt” under the law, so the property can be sold to pay creditors.Generally, those who file chapter 7 keep all of their property except property which is very valuable or which is subject to a lien which they cannot avoid or afford to pay.
Chapter 11 is known as “reorganization,” and is commonly used by businesses and a few individuals whose debts are very large.
Chapter 13 is a type of “reorganization” used by individuals to pay all or a portion of their debts over a period years using their current income.
Most people filing bankruptcy will want to file under either chapter 7 or chapter 13.Either type of case may be filed individually or by a married couple filing jointly.
