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Bankruptcy Overview
Bankruptcy laws are federal
laws designed to give those who
cannot repay their debts a “fresh start” in their financial affairs
by either eliminating debts or allowing for a structured
repayment of those debts.
The
first part of the “fresh start” offered to those persons and
businesses filing bankruptcy is protection from the normal
collection efforts of their creditors. When the bankruptcy case is
filed, creditors are notified and must immediately halt all
collection activities. The filing of a bankruptcy case thus gives
the debtor at least temporary relief from creditor contact,
lawsuits, repossessions, foreclosures, and garnishments.
The second part of the “fresh start” is relief from some or all of
the debtor’s debts. The bankruptcy debtor’s relief from his debts
comes in the form of what the bankruptcy code refers to as a
“discharge”. Simply stated, a debtor who receives a discharge of
his debts has those debts wiped out or eliminated so that his
creditors can no longer seek to collect them. There are some
limitations on the discharge of indebtedness, and that discharge
is achieved in different ways depending upon the type of
bankruptcy that the Debtor files.
The
Federal Bankruptcy Code is organized into several different
Chapters. Although there are many Chapters in the Code, the
most commonly utilized ones are Chapters 7,
11, and 13.
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