About Bankruptcy


Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can move towards a better financial future with a clean slate. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are overseen by the United States Trustee's office. In most cases, filing bankruptcy immediately stops your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.


Bankruptcy may make it possible for you to:


Bankruptcy can't cure every financial problem, nor is it the right step for everyone. In bankruptcy, it is usually not possible to:


There are four common types of bankruptcy cases provided under the law:

**Most people filing bankruptcy will file under either Chapter 7 or Chapter 13. Either type of case may be filed individually or by a married couple filing jointly. You are still able to file an individual bankruptcy even if you are married.


In a bankruptcy case under Chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a Chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for you giving up property, with the exception of "exempt" property which the law allows you to keep. In many cases, much of your personal property will be exempt. However, property which is not exempt is sold by the bankruptcy Trustee so the money can be distributed to creditors.

If you want to keep property like a home or a car and you are behind on the payments, a Chapter 7 case may not be the right choice for you. Chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan companies to take your property to cover your debt, unless you agree to continue making payments.

CLICK HERE for more detailed information on Chapter 7 bankruptcy.


In a Chapter 13 case, you will file what's called a "plan" to inform the Court and your creditors how you plan to handle each debt during the bankruptcy. Chapter 13 cases can last anywhere from 3 -5 years, depending on your income level. The most important thing about a Chapter 13 case is that it will allow you to keep valuable property, such as your home and vehicle, which might otherwise be lost. You must be able to keep current on the required payments to the Court. You must also stay current on any secured debt payments, including your mortgage and your vehicle, while you are in bankruptcy.

You should consider Chapter 13 if you:

**When considering Chapter 13, it is important to remember that you must have enough income to pay for your regular monthly expenses plus the required Chapter 13 Plan payments.

CLICK HERE for more detailed information about Chapter 13 bankruptcy.