Bankruptcy begins with the filing of a Petition in the Federal bankruptcy court, seeking relief under one of the chapters of the Bankruptcy Code. There are other papers and forms that must be filed at the same time. Branches of the bankruptcy court are located in almost all major cities. Under the bankruptcy law, people are referred to as “individuals” or “persons” to distinguish them from corporations or other business organizations.
The moment the Petition is filed, bankruptcy law imposes an Automatic Stay which operates as a restraining order against the creditors. In most cases this stops bill collectors, lawsuits, foreclosures, even the IRS. It creates a cooling off period while the court system works things out.
When a bankruptcy is successfully completed, the court issues a Discharge. A Discharge is a permanent order from the court that prohibits creditors from trying ever again to collect on a debt that has been discharged.
Most individuals seek relief under one of the two predominant kinds of bankruptcy cases—called Chapter 7 and Chapter 13. When appropriate, Chapter 7 bankruptcy allows a person to be legally excused from repaying most types of debts (but there are certain exceptions.)
Chapter 13 is generally described as Reorganization. In a Chapter 13 Reorganization, a person pays some or all of his or her debts under a structured payment Plan carried out under court protection and supervision. When the Plan term (usually 3 to 5 years) has been completed, the individual receives a discharge and all debts handled under the plan are resolved according the specific Plan terms.
Whatever your situation and background may be, know that there are caring legal professionals who will explain how bankruptcy might work for you. These professionals will ensure that your financial future will make sense and be full of hope.…