What is Bankruptcy?
Bankruptcy is a legal process through which individuals and families can obtain a fresh financial start when they are in such financial difficulty that they cannot repay their debts as agreed. The fresh start is achieved by eliminating all or a portion of existing debts and/or by stretching out the monthly payments, under the protection and supervision of the court, any debts that were not discharged. Bankruptcy is designed to give you a fresh start, to allow you as the debtor to escape from debts which are no longer manageable so that you can again become a productive member of society.
To begin the bankruptcy process, you file legal papers ( a Petition and supporting documents) with the Bankruptcy Court. You must list all your debts, property, income and expenses in these papers. After you file for bankruptcy, your creditors cannot try to collect from you directly, but they must take any claims they have against you to the Bankruptcy Court. To the uninitiated it can be a confusing and sometimes intimidating process. It is important to speak to an attorney familiar with bankruptcy law before considering filing for bankruptcy
How Can Bankruptcy Help Me?
Bankruptcy may make it possible to:
- Give you a fresh financial start by “discharging” (that is, wiping out or erasing) certain debts. This means you are not legally required to pay those debts.
- Stop most wage attachments from your pay. A wage attachment is when a creditor gets a court order allowing money to be taken from your pay to repay the debt.
- Stop creditors and debt collectors from harassing you or bothering you.
- Let you keep any future wages, money you receive, or property you buy. This means that creditors whose debts were discharged cannot come after you for the old debts.
Next: Discharging Debt