Many people want to know, What bankruptcy is and whether or not filing for bankruptcy wipe out all of a person’s outstanding debts?
Bankruptcy is a federal level court process fashioned to make it possible for consumers and businesses to wipe out or pay back their debts under the protection of a specially designated bankruptcy court.
Bankruptcies are either represented as "liquidation" (as described in Chapter 7) or as "reorganization" (as described in Chapter 13). Under the regulations of Chapter 7, a bankruptcy allows you to ask a bankruptcy court to eliminate, discharge, or expunge any debts you may owe. Under the regulations of a Chapter 13 bankruptcy, you will file a plan with a bankruptcy court that proposes a plan according to which you intend to repay your creditors. Some debts must be paid in full; others can be repaid partially or be wiped out. It depends on what your income and expenses make possible.
When you file for bankruptcy, an "automatic stay" order will be made effective. An automatic stay order will prohibit most of your creditors from taking any further action intended to collect your debts which you owe to them until such a time as the bankruptcy court lifts the stay order and allows the creditor to proceed with their collections process.
Some debts may not be forgiven by filing for bankruptcy. Where this is the case, you will still owe them as if bankruptcy was not filed for. Such debts include delinquent child support, alimony, and certain tax debts. Student loans may not be discharged unless the debtor can show that repaying them would inflict an undue hardship. Other types of debts may not be discharged in the event that a creditor convinces the bankruptcy court that the debt should remain in effect.
If you need the legal assistance of a bankruptcy attorney, contact Vivian Law Firm PLC today for a consultation.