LegalYou: Bankruptcy

We’ve all heard the term, bankruptcy.

Dramatic, overwhelming, the final act of a desperate individual. Or rather, something you can totally handle on your own in court. Seriously, you just have to know what you’re getting yourself into.

Let’s start with the basics.

What exactly is bankruptcy? Bankruptcy is the legal process where a person or entity can eliminate debt, or change the amounts you have to pay at one time. All bankruptcy cases are handled in federal court, because it’s a right provided by federal law.

Once you file for bankruptcy, collection of your debts is put to an immediate halt, at least until things get sorted out in the courtroom. In addition to a fresh financial start, bankruptcy can also stop foreclosure on a home, prevent repossession of your personal property, like automobiles, or statues of yourself, keep your utilities on, or restore your services, and stop creditor harassment, wage garnishment, and other debt collection tactics. Even if you can’t get total debt relief, you can still have your monthly payments significantly reduced.

Although it must be equally emphasized that bankruptcy can’t solve everything. Some creditors are protected from certain modifications to loan terms. And special debts, like child support, alimony, student loans, criminal fines, and taxes cannot be changed by the bankruptcy court. There are different types of bankruptcy, which are named after the chapter of the Bankruptcy Code where they are described, Chapter 7, Chapter 11, Chapter 12, and Chapter 13.

Each one has its own unique factors, analyses, and requirements to consider before knowing which one to file. The two most common types are Chapters 7 and 13. Chapter 7 is a fresh start, while Chapter 13 is a reorganization.

LegalYou can help you sort out these difficult decisions and many others. Even though you’re representing yourself, you’re not alone.

Any other questions you have regarding this or other legal matters, visit