Consumer: What is Bankruptcy? (FAQs)
FAQ
- What is Bankruptcy?
Bankruptcy is a legal proceeding in which a person who cannot pay his/her bills can stop all CREDITORS from collecting debts from you, at least, until the court sorts the debts accordingly by law.
By filing bankruptcy, you may:-
Eliminate the legal obligation to pay your debts. This is called “discharge.”
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Stop foreclosure on your house or mobile home and allow you time to catch up on missed payments.
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Prevent repossession of property such as a car.
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Stop action by creditor to collect a debt.
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Restore or prevent termination of utility services.
In bankruptcy it is usually not possible to
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Eliminate the rights of creditors who are secured. (Creditors who have a lien on property as collateral for a loan).
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Discharge or eliminate certain debts, such as, child support, alimony, most student loans, court restitution orders, criminal fines, taxes.
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Protect cosigners on your debts. If you discharge a loan in bankruptcy the cosigner may still have to pay.
See Quick Facts Consumer: What is Bankruptcy? for more info.
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