What Is Bankruptcy?

Bankruptcy is a legal proceeding for relief from debt. The most common bankruptcy proceedings are commonly known as "Chapter 7" and "Chapter 13". These terms are taken from the Chapter in which their provisions appear in the Bankruptcy Code.

Chapter 7 results in the discharge of most debts including:

credit cards
medical bills
personal loans
past due utilities, cell phone bills
leases for apartments or equipment
business loans
automobile loans (unless you want to make payments and keep the car)
mortgage (unless you want to make payments and keep the house)
most other loans except:
1. Student loans (unless there is substantial hardship)
2. Child support
3. Income tax (unless due for more than 2 years)
4. Fines owed to governmental agencies

Chapter 13 results in the creation of a plan for repayment of that part of your debt which you can afford to pay under your circumstances over a five year period of time.Your attorney will discuss options with you and will help you determine which plan you qualify for and which is best for you.

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