Bankruptcy is a legal process designed to help people or businesses reduce, restructure or eliminate some or all of their debt. When prepared correctly, a bankruptcy petition is the most effective legal tool to deal with overwhelming debt.
Bankruptcy cases filed in the US are governed by the Bankruptcy Code, which is a federal law. These cases are administered by federal bankruptcy courts.
When you file a petition for protection under the Bankruptcy Code, you are designated as the “debtor.” As a bankruptcy debtor you may use bankruptcy to eliminate or restructure your debts. Chapter 7 bankruptcy is the most popular of the bankruptcy proceedings because you can use it to eliminate most debts completely.
Chapter 13 bankruptcy, on the other hand, is another popular type of bankruptcy that allows you to restructure your debts, usually paying but a fraction of what you owe through a court-mandated plan that you have control of. That means that if the bankruptcy plan complies with the law’s requirements, your creditors are bound to your plan and cannot reject it.
Business entities may also be debtors, although some different rules apply. Businesses may file Chapter 7 to wind down their affairs, or they may file Chapter 11 bankruptcy to reorganize and restructure their debts.
Bankruptcy works as an all-inclusive solution if you cannot cope with your total debts. Personal bankruptcy is meant to provide you relief from debt if you are an “honest but unfortunate debtor.” In exchange for such a powerful legal option at your command, it demands accurate disclosure of your financial information to determine eligibility. Knowing in advance your eligibility for a particular bankruptcy chapter, and forecasting the probable outcome is why most people retain an experienced bankruptcy attorney.
Effects of a successful bankruptcy proceeding
If your bankruptcy is successful you will receive a discharge of some or all of your debt. If your bankruptcy concludes with a discharge, your creditors that are subject to the discharge can no longer collect from you. Any lawsuit, collection letter or even a simple telephone call from a creditor demanding payment will be considered a violation of the federal court’s authority to grant economic relief and may be subject to sanctions against the offending creditor.
While bankruptcy should generally be considered a last resort, in appropriate cases you can use it as a powerful tool to eliminate or restructure debt and regain your peace of mind when you find yourself facing insurmountable debt.
Collectively, the attorneys from Law Offices of Jeffrey Lohman, P.C. have over 17 years working consumer bankruptcy cases in various federal bankruptcy courts. We offer a free, no-commitment, confidential consultation to determine if filing for bankruptcy protection is the best way to tackle the debt problems you may be experiencing. If you wish to schedule your confidential, in-person or telephonic consultation, please call us at (855) 717-8790 or email us at info@jlohman.com.
The Law Offices of Jeffrey Lohman, P.C. is considered a debt relief agency pursuant to federal law. We are attorneys who help people file for bankruptcy relief under the Bankruptcy Code.