Bankruptcy Lawyer

Bankruptcy?

What Is Bankruptcy And What Can It Do For You?

Bankruptcy is a legal process that is available to people who are unable to pay their debts and allows them to make a fresh financial start.  Bankruptcy is a creation of Federal law, as such it is controlled by Federal Law and handled in Federal Bankruptcy Courts.  The filing of bankruptcy stops creditors from collecting debts, at least until after a person’s debts are sorted out according to applicable bankruptcy laws.

Bankruptcy allows people to discharge or eliminate the obligation to repay some or all of their debts.  Filing bankruptcy:

(1) stops foreclosure proceedings on a person’s home and allows a debtor an opportunity to catch up on missed payments (it is important to note that bankruptcy does not automatically eliminate mortgages and other liens on property),

(2) stops repossession proceedings on vehicles or other property and can even force lenders to return repossessed property to the debtor,

(3) can halt wage garnishments, debt collection harassment, and other similar actions by creditors,

(4) can restore service or prevent termination of utility services,

(5) allows an individual to challenge the claims of creditors who have committed fraud or are attempting to collect more for a debt than what is actually owed.

While bankruptcy can discharge most types of debt it is important to note that not all forms of debt can be discharged during this process.  Debts that are considered “secured” usually cannot be eliminated by filing bankruptcy.  A debt is secured when the creditor receives a mortgage or a lien on the property to hold as collateral as part of the conditions of the loan.  Through bankruptcy an individual can force a secured creditor to take payments over time or the debt can be discharged if the creditor is allowed to reclaim the property.  Also, bankruptcy law has determined that certain types of debt simply cannot be discharged by filing bankruptcy.  Some examples are child support, alimony, court restitution orders, criminal fines, some student loans and certain taxes.

For many people bankruptcy can be an excellent opportunity to get a fresh financial start and relieve themselves of a terrible burden.  However, bankruptcy does have its drawbacks and for some people it may not be the best option.  For example, filing bankruptcy can have a negative impact on your credit rating making it difficult to borrow money in the future.  Also, not all forms of debt can be discharged by bankruptcy so if your debt falls into one of these categories filing bankruptcy will be of little benefit to you.

If you are thinking about filing for bankruptcy, or want to discuss the options available to you, please call to speak to an experienced bankruptcy attorney at Hurst & Hurst Law at (859) 209-2101.