Bankruptcy - What is Bankruptcy? 

Bankruptcy - What is Bankruptcy?

Not too long ago I had to consider filing for bankruptcy so I thought I'd share a little about my experience and what bankruptcy is all about. It's not a fun thing to do but sometimes it's necessary.



The Bankruptcy Code is a federal law passed by Congress to provide a fresh start for individuals who run up more bills than they can hope to pay. Any person who owes debts may file for bankruptcy. An individual's motive for filing bankruptcy is generally irrelevant, unless it is for the purpose of committing fraud, in which case the bankruptcy can be dismissed and the protection of the Bankruptcy Code is lost.

Upon the filing of a bankruptcy, the provisions of the Bankruptcy Code prohibit any creditor of the filing individual, the debtor, from attempting to collect money. Creditors may not call the individual, send letters, or sue to be paid. The bankruptcy also stops any lawsuits which have already been brought against the individual. Instead, the creditors must wait to be paid in the bankruptcy case.

There are two basic forms available to individuals. A Chapter 7, which is a liquidation of the person's assets, or a Chapter 13, which is a repayment of debts over time.