Bankruptcy is a form of court-administered debt relief provided under Title 11 of the U.S. Code. At Consumer Law Pro, we can help you file:
- Chapter 7, also called liquidation bankruptcy. Your nonexempt assets are sold off to pay your creditors. No repayment plan exists under this chapter because most or all of your unsecured debt is discharged at the end of the process. Debtors with an income above the state’s median income for a household of their size might not qualify.
- Chapter 13, which is a reorganization of your debts into a 3-5-year partial repayment plan after which the remaining unsecured debt is discharged. The amount you pay in Chapter 13 is determined by your income and expenses.
- Chapter 11, which is reserved for businesses of all sizes and individuals with high incomes and high-value assets. Like Chapter 13, it is a form of debt reorganization. Qualifying small businesses may be able to file under Subchapter V of Chapter 11, which is a more streamlined and cost-effective version.
What Is an Automatic Stay?
One of the most substantial benefits of bankruptcy is the court order that takes effect as soon as you file: the automatic stay. This order halts all collection actions for the duration of your bankruptcy process.
More specifically, the automatic stay prevents creditors and collection agencies from initiating or continuing:
- Car repossession
- Bank levies
- Wage garnishment
The relief from these drastic measures is powerful, allowing debtors a chance to reorganize or discharge their debt without the immediate threat of losing what’s most important to them.
Does Bankruptcy Discharge All Debt?
In most cases, bankruptcy can discharge unsecured debt, which includes credit card debt, medical bills, utility bills, and any other debt that isn’t guaranteed by some form of collateral.
Unfortunately, not all debt is dischargeable through bankruptcy. If you owe back taxes, federal student loans, alimony, or child support, bankruptcy may not completely free you from your financial obligations. However, bankruptcy can allow you to discharge other types of debt or create a reasonable repayment plan according to your income. Many people use Chapter 13 bankruptcy, for example, to spread delinquent mortgage payments over the course of their 3-5-year plan, effectively catching up on what they owe without losing their homes to foreclosure.
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