Bankruptcy is a method by which debts are discharged by filing a petition in federal court.
Often, consumers, especially those who have maximized their credit limits and have no savings, cannot pay their bills when a crisis hits, such as a job layoff, accident, or illness. Bankruptcy provides consumers with relief from creditor pressures and a fresh start. After you file a Chapter 7, most creditors will be prohibited from taking your wages to pay your debts. To succeed in a Chapter 13, you must have a regular income, such as wages from employment, alimony, or monthly Social Security benefits. In a Chapter 7, most of your property will be sold by a Chapter 7 trustee and the money will be given to your creditors.