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A Financial “Fresh Start”

Bankruptcy is a process designed to provide a financial “fresh start” to those with burdensome debts. Bankruptcy protects debtors against collections, garnishments, lawsuits, creditor harassment, and in certain cases avoids repossession of vehicles and foreclosure of homes. At the end of the process, bankruptcy results in a discharge, releasing the debtor from personal liability from specific debts, prohibiting creditors from collecting on those debts in the future, and ultimately gives the debtor peace of mind and a clean slate from which to start anew.

While nobody wants to file bankruptcy, it is important to understand that it is not the goal of the bankruptcy code to take away all of your assets, leaving you living in a cardboard box under a bridge. The code has certain exemptions, allowing you to keep assets such as home equity, vehicles, tools of the trade and the like - as well financial assets such as retirement funds.

There are two primary forms of consumer bankruptcy: Chapter 7 (liquidation) and Chapter 13 (reorganization). The decision of whether to file under Chapter 7 or Chapter 13 requires thorough analysis and may vary from case to case.

TIPS: Chapter 7 OverviewChapter 13 OverviewCommon Bankruptcy ConcernsThe Automatic StayBankruptcy and Foreclosure