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Bankruptcy Process

Bankruptcy Basics

First, what is bankruptcy, exactly?
Bankruptcy is a proceeding under federal law where you are granted partial or complete relief from the payment of your debts. This relief is provided in the form of an “automatic stay” issued automatically and immediately upon the filing of the bankruptcy petition which stops all creditor collection activities. The Bankruptcy Court enters an order at the end of the case relieving you from responsibility for paying certain debts. This final order is called the discharge. 

Who files bankruptcy?
The economic slowdown continues to increase the number of persons filing for bankruptcy. An individual, a partnership or a corporation may file a Chapter 7 bankruptcy. Only individuals may file a Chapter 13 bankruptcy. If you are married you can file by yourself or file a joint petition with your spouse.

If you are considering filing for bankruptcy, you are not alone. Many people have and will continue to file for bankruptcy due to the times with corporate layoffs, downsizing and continuing business failures.

Generally, people filing for bankruptcy are dealing with the following situations:

  • Lost their job or their primary means of support;
  • Been laid off from their job;
  • Been demoted or given a significant pay cut;
  • Major family problems such as divorce;
  • Major credit card problems;
  • Catastrophic medical-doctor bills;
  • Repossessions or impending foreclosure; or
  • Desperate financial situations with little hope.

To better understand your bankruptcy options, please contact us for a free consultation.

Should You Consider Bankruptcy?
The most common sign that you may need to file bankruptcy is that you cannot pay your debts as they become due. If you are borrowing on credit cards, taking out loans to make your monthly payments, or are considering a consolidation loan you may want to consider Chapter 7 or Chapter 13 bankruptcy. Another common sign is that collection agencies are dunning you, or you may even find yourself being sued or garnished. If you are already being garnished, a bankruptcy can stop it.

If you are behind on mortgage payments or your home is threatened with foreclosure, a Chapter 13 bankruptcy can prevent that foreclosure and give you time to bring the payments current. In fact, bankruptcy may be the only way to save your home.

If you are behind on car payments or if a creditor is threatening repossession, bankruptcy can stop that. If you owe taxes and the IRS is threatening to seize or garnish you, a bankruptcy may be the only effective way to deal with the IRS. If your driver’s license has been suspended because of unpaid fines, you may file a Chapter 13 and get your license back.

If your debts are overwhelming and you see no way out, then bankruptcy can give you a fresh start. If your income has declined so that you cannot meet all of your obligations, bankruptcy can reduce your obligations or possibly eliminate them so that you may support yourself in a reasonable, dignified manner.

Common questions about the Bankruptcy Process:

  1. How do I start the bankruptcy process?
  2. What do I need to take with me to the first appointment?
  3. How long does it take?
  4. Do I have to go to court?
  5. Do I get to keep my property?
  6. What debts cannot be eliminated?
  7. Is my retirement money protected?
  8. Can I file more than once?
  9. Will my employer be notified?
  10. Should I dispose of my possessions before I file?
  11. What about my credit? And my creditors?
  12. Do both husband and wife have to file?
  13. Can I protect my co-signers?
  14. Can I file while I am getting divorced?
  15. Can I eliminate tax debt through bankruptcy?
  16. Will I be discriminated against after filing?

More Basic Bankruptcy Advice can be found here.