Find out about the bankruptcy laws by state and federal bankruptcy laws. Bankruptcy has been designed for people trapped in severe financial circumstances beyond their control such as illness or loss of a job. It provides individuals with excessive debt an opportunity to make a fresh start by reducing or eliminating the debt. While some debts will be eliminated, others such as alimony and child support will not be discharged.
Bankruptcy is a constitutional right.
If the court grants the petition, a trustee divides the debtor's property and pays each creditor all, or a portion of their debts. Bankruptcy is not a pleasant experience, but it does provide individuals an opportunity to manage severe debt problems. The bankruptcy procedure can temporarily prevent creditors from actions such as foreclosure on a home or repossession of an automobile. It can also stop wage garnishment, debt collection harassment and disconnection of utilities. The creditor cannot take further action against the individual unless the creditor obtains permission from the bankruptcy court.