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Commonly Asked Bankruptcy Questions

1. What is Bankruptcy?

A legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor either under Chapter 13 reorganization or under Chapter 7 liquidation (most common). Upon the successful completion of bankruptcy proceeding, the debtor is relieved of the debt obligations incurred prior to filing for bankruptcy.

2. What is Bankruptcy used for?

Bankruptcy offers an individual or business a chance for a financial fresh start.  

3. What are the different types of consumer Bankruptcy?

Chapter 7 -provides discharge of debts and a liquidation of any assets valued above debtor's exemptions. Exemptions are the set value a debtor may have in items such as a house, car, or household goods that a trustee or creditors cannot take. Many Chapter 7 cases are no assets cases having no assets available for a trustee to take, sell, and distribute to creditors. In turn, the debtor receives a discharge of debts. It is advisable for debtors to seek an experienced bankruptcy attorney to discuss which debts are dischargable in a Chapter 7 bankruptcy. Some debts are excepted from discharge such as, student loans.


Chapter 13 - is a reorganization of debts. If the debtor has excess income, received a discharge from a prior chapter 7 within the last 8 years, is attempting to cure mortgage arrears or has equity in something they wish to keep, then the bankruptcy Code provides relief under Chapter 13. The debtor pays the Chapter 13 Trustee a monthly plan payment for no less than 36 and no more than 60 months. It is advisable for debtors to seek an experienced bankruptcy attorney to discuss the advantages of a Chapter 13 bankruptcy and help guide the debtor through the process. At times, Chapter 13 can be the better option.  

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