Category: Uncategorized

Bankruptcy Basics
Most people think of bankruptcy as a process in which you go to court and get your debts erased. It is not that simple.

In fact, there are two types of bankruptcy: the familiar liquidation bankruptcy, where your debts are wiped out (Chapter 7 bankruptcy) and “reorganization” bankruptcy, where you partially or fully repay your debts. The reorganization bankruptcy for individuals is called Chapter 13 bankruptcy. (There are two other kinds of reorganization bankruptcy: Chapter 11, for businesses and for individuals with debts over $1 million, and Chapter 12, for family farmers.)

Filing for bankruptcy puts into effect something called the “automatic stay”, which immediately stops your creditors from trying to collect. Creditors cannot garnish your wages, empty your bank account or go after your car or house.

Until your bankruptcy case ends, your financial problems are in the hands of the bankruptcy court. The [...]