Bankruptcy Part One

July 17th, 2010

What is Bankruptcy?

Bankruptcy is a procedure you can go through in a federal bankruptcy court that allows you to discharge (or get rid of) all or a portion of your debt.

Why is bankruptcy beneficial? What is an automatic stay?

One of the most important and beneficial things about bankruptcy is that the minute you file your petition with the court stating that you are asking to be declared bankrupt, all of your creditors are stopped from any collection attempts. This is called an automatic stay and can do a lot to relieve the tension and mounting panic you feel. This means creditors cannot take your car, garnish your wages, call you about your debt, or try to collect in any way.

What happens whan a bankruptcy is filed?

When a bankruptcy is filed, a trustee is appointed to handle the bankruptcy case. The trustee divides up your assets among your creditors.

Two types of bankruptcies

There are two types of bankruptcies available to consumers: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.

Requirements for filing bankruptcies

You must reside in a state for 90 days prior to filing for bankruptcy in that state. To file for bankruptcy, you will probably need an attorney who will require that you pay him or her. You must also pay a filing fee with the court. The attorney will complete a Petition for Bankruptcy,which is a very long document that lists your personal information as well as details all of your assets and your debts.