Bankruptcy Explained

Bankruptcy is a legal proceeding under federal law which allows a person who can no longer pay his or her bills to get a fresh financial start. When a person or business files for bankruptcy, an “automatic stay” goes into effect, stopping all collections actions against them. This automatic stay can be used to stop foreclosures, repossessions, and collection calls and allow the debtor to sort out his or her financial problems. Bankruptcy allows you to “discharge” or eliminate the legal obligation to pay most or all of your debts.

Bankruptcy can also be used to stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt. However, bankruptcy cannot discharge certain types of debt, which are singled out by the bankruptcy code. These debts include child support, alimony, most student loans, court restitution orders, criminal fines, and most taxes. Additionally, bankruptcy cannot protect any cosigners on your debts, and the consigner’s obligation will not be discharged. Finally, bankruptcy cannot discharge any debts that arise after bankruptcy has been filed.

It is important if you are considering bankruptcy that you speak with an attorney. Laws change, and there are exceptions to many of the bankruptcy rules. At the Law Office of Sean T. Flynn, PLLC, we can guide you through the different bankruptcy rules and provisions, and can help you maximize the value of your rights under the Bankruptcy Code.