Bankruptcy
The U.S. Bankruptcy Code is divided into sections called "chapters." Each chapter is devoted to a specific aspect of the code. Some chapters, like Chapter 11, are intended to govern the procedures for large, complex business organizations such as corporations that are seeking the protection of the courts while they work out a plan to satisfy their debts and resume operating normally-reorganization-or, if that proves impossible, for selling the company's assets and distributing the proceeds to creditors until the money runs out-liquidation. For most individuals, the two chapters of the bankruptcy code that are applicable are Chapter 7, which governs a personal bankruptcy in which assets are sold and the proceeds paid out to creditors, and Chapter 13, which contains the rules for a bankruptcy in which a repayment plan is worked out to allow the debtor to retain assets and still satisfy creditors over time. Another section, Chapter 12, governs bankruptcy by family farmers and is fairly similar to Chapter 13.
For individuals in Chapter 7 or Chapter 13 the process is as follows:
- Talk to an attorney
- Analysis of your financial affairs by an approved credit counseling agency
- Completion of an approved credit counseling course
- Filing the case with the bankruptcy court
- The 341 (creditors') meeting
- Repayment period (in Chapter 13)
- Completion of a pre-discharge debtor education course
- Discharge
If you believe that bankruptcy is the best alternative for you, you can receive a free bankruptcy consultation.