Bankruptcy Basics

Bankruptcy Basics

The Basics of Bankruptcy

Bankruptcy is a legal proceeding in which a person who can not pay their bills gets a fresh financial start. The right to file for Bankruptcy is provided by federal law, and all Bankruptcy cases are handled in federal court. Filing Bankruptcy immediately stops your creditors from seeking to collect debts from you, at least until they are sorted out according to the law.

Bankruptcy may make it possible for you to:

  • Eliminate the legal obligation to pay most or all of your debts
  • Stop foreclosure on your house or mobile home
  • Allow you an opportunity to catch up on missed home and car payments
  • Prevent repossession of a car or other property
  • Force a creditor to return property even after it has been repossessed
  • Stop pending and potential lawsuits
  • Stop wage garnishment
  • Stop harassing collection calls
  • Restore or prevent termination of utility service
  • Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe
  • Remove a second mortgage or HELOC (in Chapter 13 Bankruptcy)

For more details, review the information on Chapter 7 and Chapter 13 Bankruptcies.