Bankruptcy is a legal process through which people and businesses can obtain a fresh start financially. It is an option for people and/or businesses when they are to the point in their financial difficulties that they cannot repay their debts. When a person or business files for bankruptcy and receives a discharge, the court eliminates all or a portion of that person’s or business’s existing debts under Chapter 7, or stretches out the monthly payments on those debts under the court’s protection and supervision under Chapter 13. While in your Chapter 7 or Chapter 13, you have protection from your creditors being able to collect from you in any way including threatening phone calls, garnishments, and even foreclosure attempts.
The bankruptcy process can also protect your creditors in certain instances. Secured creditors are often in a better position than unsecured creditors because secured creditors hold a lien, which is an interest in the property of the debtor that backs up their right to payment. An example of this type of creditor would be a car creditor or a mortgage holder; they hold your property as collateral for your loan. If the debtor wants to keep the property, they also have to keep the loan. While most loans would be discharged through a bankruptcy, a secured creditor has more ground to continue to receive payments. Sometimes even general unsecured creditors can obtain some money from a debtor’s estate, and will share equally in whatever payments are disbursed through the case if there is an asset the trustee liquidates to disburse. While the bankruptcy is pending most creditors cannot try to collect their debts from the debtor directly. Nor can they try to collect from the debtor after the conclusion of the case for all discharged debts. However, not all debts are discharged; therefore, the debtor may still be liable for some debts after the conclusion of the bankruptcy.
Filing for bankruptcy is a very personal and serious decision. Most people file for bankruptcy after they have attempted to repay their debts, but have no way to continue paying them. Once the person or business has made the decision to file, the person or business may declare bankruptcy by filing a petition with U.S. Bankruptcy Court. The person filing for bankruptcy must provide information about his or her assets, liabilities, income, and expenses, as well as additional information as it pertains to their specific case.
It is almost always in your best interest to have an attorney prepare and file your bankruptcy petition and other information, although some debtors do choose to represent themselves. However, a debtor who chooses to file the bankruptcy on their own rather than to hire an attorney is held to the same standard as someone who chooses to hire an attorney. Some of the required bankruptcy forms are detailed and some may be difficult to understand. It is important that the forms are filled out completely and accurately, and failure to do so can delay the bankruptcy and result in the dismissal of your case. Contact your St. Louis Bankruptcy Attorney for assistance in filing your bankruptcy case!