 Bankruptcy is a legal proceeding in which people who cannot pay their debts can get a fresh financial start. The right to file for bankruptcy is provided for by the law, and all bankruptcy cases are handled in court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.
There is voluntary bankruptcy (you file for bankruptcy yourself, or get a lawyer to do it for you) and involuntary bankruptcy (where creditors file a petition in court against you in an effort to recoup all or a portion of what is due to them). Bankruptcy is by no means a cure-all as it does not automatically eliminate mortgages or loans on your property or car, or other ‘secured’ debt. You cannot keep the item (house or car, etc.) unless you continue with repayments on these items. |
Debt Blog 