Bankruptcy is a legal process that allows individuals and businesses to eliminate some or all of their debts. Governed by federal rules, it is a way for people to get a fresh start in their financial lives.

By filing for bankruptcy, people can put an immediate stop to actions such as lawsuits by creditors, foreclosure proceedings, or repeated calls from collection agencies. Once the bankruptcy process is complete and debts are “discharged” by the bankruptcy court, creditors are no longer allowed to pursue in any way the debtors who undertook this process.

The two main types of bankruptcy are Chapter 7, or “liquidation” bankruptcy, and Chapter 13, or “reorganization.” Based on their income, some people may qualify for one type of bankruptcy but not another. The two types of bankruptcy follow different procedures and cover somewhat different types of debts. Chapter 7 bankruptcy is a much faster process—generally lasting several months; discharging debts through a Chapter 13 bankruptcy is likely to require several years.

There are drawbacks and benefits to each type of bankruptcy, and different eligibility requirements for filing for either one. Moreover, some types of debts, such as child support, certain student loans, or tax liabilities cannot be eliminated through bankruptcy.

Once a person files for bankruptcy, all the creditors listed in the required paperwork are notified of the filing, and of the fact that they can no longer attempt to collect during the ongoing bankruptcy process. The creditors have the option to file a complaint objecting to the discharge of their debt, or to the approval of a repayment plan. If they do object, they trigger an adversarial hearing (a type of trial), during which a bankruptcy judge determines the ultimate outcome for that debt.

An experienced bankruptcy attorney can help a potential petitioner determine the best way to achieve maximum protection, gather all the necessary paperwork, properly fill out and file the bankruptcy petition, and respond to any objections that creditors might raise.

If you are considering the option of bankruptcy, please contact our office for a free evaluation of the best way for you to get a fresh financial start: call us at 408-292-4849.