What is Bankruptcy?
Bankruptcy is a legal proceeding in which people who cannot pay their 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 or mobile home 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 collec
Bankruptcy is essentially a declaration to your creditors that you cannot afford to repay your debt. Once a bankruptcy order has been made your creditors will not be able to contact you directly again. Recent changes to regulations in bankruptcy, effective from 1st April 2004, allow for automatic discharge from bankruptcy within 12 months. You will be required to make payment towards bankruptcy debts for a total of 3 years after the bankruptcy order has been made.
Bankruptcy is a way for people or businesses who owe more money than they can pay right now (a “debtor”), to either work out a plan to repay the money over time, under Chapter 11, 12 or 13, or for most of the bills to be wiped out (“discharged”), as in a chapter 7 case. While the debtor is either working out a plan or the trustee is gathering the available assets to sell, the Bankruptcy Code provides that creditors must stop all collection efforts against the debtor.
Bankruptcy is a process established by a set of federal laws that is designed to give debtors a “fresh start” by canceling many of their debts through an order of the court. Bankruptcy also allows creditors who are owed money a chance to get their designated share of any money the debtors can afford to, or are obligated to, pay back. When a bankruptcy is filed, creditors have to stop any attempt to collect a debt, at least temporarily. There is usually immediate relief from creditor pressure, and a bankruptcy can stop a pending foreclosure sale of your home, a garnishment of your wages, or a threatened repossession. Most creditors cannot call, write or sue you after you have filed bankruptcy. Are you new to Dave Ramsey?
