Learn About the Bankruptcy Process

Bankruptcy Overview

Bankruptcy law provides for the development of a plan that allows a debtor, who is unable to pay his creditors, to resolve his debts through the division of his assets among his creditors. This supervised division also allows the interests of all creditors to be treated with some measure of equality. Certain bankruptcy proceedings allow a debtor to stay in business and use revenue generated to resolve his or her debts. An additional purpose of bankruptcy law is to allow certain debtors to free themselves (to be discharged) of the financial obligations they have accumulated, after their assets are distributed, even if their debts have not been paid in full.

There are two basic types of Bankruptcy proceedings. A filing under Chapter 7 is called liquidation. It is the most common type of bankruptcy proceeding. Liquidation involves the appointment of a trustee who collects the non-exempt property of the debtor, sells it and distributes the proceeds to the creditors. Bankruptcy proceedings under Chapters 11 and 13 involve the rehabilitation of the debtor to allow him or her to use future earnings to pay off creditors. Under Chapter 7, 13, and some 11 proceedings, a trustee is appointed to supervise the assets of the debtor. A bankruptcy proceeding can either be entered into voluntarily by a debtor or initiated by creditors. After a bankruptcy proceeding is filed, creditors, for the most part, may not seek to collect their debts outside of the proceeding. The debtor is not allowed to transfer property that has been declared part of the estate subject to proceedings. Furthermore, certain pre-proceeding transfers of property, secured interests, and liens may be delayed or invalidated. Various provisions of the Bankruptcy Code also establish the priority of creditors' interests.

Recent passage of the Bankruptcy Prevention and Consumer Protection Act in April 2005 has also resulted in major reforms in bankrupcy law, outlining revised guidelines governing the dismissal or conversion of Chapter 7 liquidations to Chapter 11 or 13 proceedings. This website can provide an overview of your options if you are considering bankruptcy. However, the best thing you can do is contact us for a consultation so that we can discuss the specific circumstances you are facing.

Part 1 - Introduction


Bankruptcy is a legal process that provides relief to many individuals who can no longer pay all of their debts.


Part 2 - Types of Bankruptcy


There are three main types of bankruptcy cases for individuals, the most common of which are chapter 7 and chapter 13.


Part 3 - Limits of Bankruptcy


Some debts cannot be discharged in a bankruptcy.


Part 4 - Filing for Bankruptcy


In order to file for bankruptcy, an individual must take a credit counseling course and accurately complete and file a number of documents.


Part 5 - Creditors' Meeting


Every debtor is required to appear at a creditors' meeting conducted by a trustee who asks the debtor questions about the debtor's financial condition and gives creditors the opportunity to do the same.


Part 6 - Court Hearings


In some cases, a debtor may be required to appear at hearings before a bankruptcy judge.


Part 7 - The Discharge


Debtors are usually able to discharge most or all of their debts. Once a debt is discharged, a creditor may not attempt to collect it from the debtor.


Part 8 - Legal Assistance


Debtors are strongly encouraged to find competent legal counsel. Even if you cannot afford to pay an attorney, you may be able to qualify for free or discounted legal services.