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Bankruptcy is a legal procedure designed to protect an individual or business that cannot meet its legal obligations.

A chapter 7 is known as a straight bankruptcy.  A trustee, appointed by the court, may liquidate your non-exempt property, and use the proceeds to pay your creditors. But in most cases, you may be able to keep your property.

A Chapter 13 bankruptcy is known as adjustment of debt.  Under Chapter 13, you make payments to the trustee in installments, and the trustee uses the money to pay off your creditors.

A Chapter 11 bankruptcy is generally use by corporations and is very complex.

When a bankruptcy ends, the borrower is no longer liable for dischargeable debt.

Bankruptcy allows you to begin with a clean financial slate. However, it does remains on your credit record for 10 years, and is the best and only solution for extreme hardship.

Bankruptcy law is complex, usually requiring the help of an experienced attorney.

Chapter 7 bankruptcy allows individuals or business who cannot pay bills with the opportunity to eliminate debt.  There will no longer be a legal obligation for you to pay your debts, and no limits to the amount of debt you may have.

Approximately 1 million people file for bankruptcy each year, usually because of large credit card debts, accidents, hospital bills, or unemployment.

You do not need to be employed to file, and in most cases, you will retain all your possessions.
There are some debts that are not dischargeable, such as student loans, current incomes taxes, and child support payments

Debt consolidation, known as Chapter 13, allows the payment of all or part your debts if you have a steady income.

A plan of repayment is submitted to the court for approval.  You then make regular payments to the trustee, who distributes it to your creditors.  Usually you will pay less than you owe.

A chapter 13 bankruptcy lasts up to 3 years, and up to 5 with permission of the court.
You may need the assistance of an experienced attorney, since the Chapter 13 process is longer.

Some creditors and collectors are reasonable, while some are more aggressive. As a last resort, filing bankruptcy will stop them from harassing you.

Before filing a Chapter 7, it is determined if the person filing will lose any property.  The bankruptcy code ensures that certain property be exempt, depending on the limit.  Each state has certain exemption rules.  Personal items, tools in trade, and equity in the house are usually exempt and you can keep them.  It is best to speak to an experienced attorney to determine what property you can keep and what not.

If you are not late on your payments for car or home loan, then you will be able to keep it, as long as you keep making payments.  If you are late on payments, and the creditors have not taken the house yet, then you can file Chapter13 to keep it while making make regular payments under bankruptcy protection.  If you file bankruptcy, then, the creditors cannot take the house or car without court permission.  If the creditor is forced to take the property, then they may auction it off and you will not be liable for any payment on the debt.

Bankruptcy can help stop repossessions.  If you file for bankruptcy, creditors will not be able to take it without the court’s permission.

If you are behind on your payments, bankruptcy will give you time to figure out how to pay the missed payments either under chapter 7 or chapter 13.

In a Chapter 7, the court issues an order that releases you from your  legal obligation to repay your debts and orders creditors not to attempt to collect it.  In Chapter 13, you pay it over time, and whatever is not paid off by the end of the plan, you will not be liable for.

Recent changes in the federal law has made it difficult to wipe out student loans in Chapter7.  But if you can show that it will cause undue hardship to you, then you may be able to wipe it out.  If you can’t wipe it out in Chapter 7, consider filing a Chapter13, since there are some advantages it may provide.  This is a tricky area of law, it is best to speak to an experienced bankruptcy attorney.

Typically, for a Chapter 7, it takes 3-4 months from filing papers till the court actually wipes out your debt.  You do not have to go to court for 4 months. In fact, you may only need to go to court one time for one short hearing.  The 4 months is for creditors to receive notices of your case and take action.  Chapter 13 lasts 3-5 years.  You do not have to wait until the end and when case is completely over to stop paying bills.

The cost is based on the type of bankruptcy that is most helpful for you, and the amount of time needed to help you properly wipe out debt and protect property.  In Chapter 13, the court has guideline fees which attorneys need to follow. In most cases, the attorney fee is consolidated into the reorganization plan, and the trustee transfers the fees to the attorney.

In a Chapter 7, there is no guideline fee.   But in all cases the attorney must disclose the fees to the courts, thus ensuring that your fees are fair.

Federal law allows people to file Chapter 13 bankruptcy whenever it is necessary, thus there is no time restrictions.  Chapter 13 can be filed repeatedly, as long as it is done in good faith.  Chapter 7 can be filed more than once, but generally only once every 6 years.

When you file bankruptcy, the attorney files a list of the names and addresses of your creditors.  The court sends notices to the people on the list, saying  and that you are protected by the court and there is a restraining order against anyone that owes you money.  This will also protect you from overly aggressive creditors.  Your employer or friends will not be notified unless you owe them money.