What is Bankruptcy?

Bankruptcy is simply a process that was established by a set of federal laws that are designed to give debtor's a "fresh start" by canceling many of their debts through an order of the court. 

Bankruptcy will also allow creditors a chance to get their designated shares of any money that the debtor can afford to, or are obligated to, pay back to the creditors.

When an individual files bankruptcy, the creditors must stop any attempts to collect the debts, at least temporarily.  There is usually some immediate relief from creditor pressure, and a bankruptcy can stop a pending foreclosure sale of your home, a garnishment of your wages, or a threatened repossession.  During a bankruptcy, most creditors cannot call, write, or sue you after you have filed bankruptcy.

What Bankruptcy Doesn't Cover

There are some things that a personal bankruptcy will not cover.  A personal bankruptcy usually does not erase child support payments, alimony, fines, taxes, and some student loan obligations you may have.

 Also, unless you have an acceptable plan to catch up your debt under a chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or lien on it.