Bankruptcy is a term often associated with situations of financial hardship. It is also a valuable tool to assist individuals in repaying debts and rehabilitating themselves from financial hardships. Although federal laws attempt to make the bankruptcy process easy for the common person to use, the procedures are often complex and require the guidance of an experienced attorney.
The two most common types of bankruptcies involve the liquidation and reorganization of a person’s assets to alleviate financial burden. Liquidation of assets, known as Chapter 7 Bankruptcy, is when a debtor requests a legal discharge of his/her debts from the bankruptcy courts. Chapter 13 Bankruptcy is when a debtor is responsible for repayment of debts in a pre-determined plan of how and when the debt(s) will be repaid.
The entire bankruptcy process occurs under the guidance and jurisdiction of the Federal Bankruptcy Court. Regardless of the type of bankruptcy filed, upon the initial filing an order called an automatic stay will be administered by the court. An automatic stay will stop most creditors from pursuing collections from the debtor filing bankruptcy. During the automatic stay period, the court will often freeze certain debts. Specific bankruptcy filing impacts include the following:
There are certain debts that cannot be discharged and a debtor will continue to be responsible for payment on them, including unpaid child support, alimony, and tax debts. Additionally, a bankruptcy court may not discharge student loans unless a debtor can show that repayment would create be an undue hardship.
The Law Firm of Luftman, Heck & Associates, LLP is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. The information provided on the web site is not, nor is it intended to be, legal advice or an offer to represent you.