If you're overwhelmed with debt, filing for bankruptcy can give you a fresh financial start—but it's important to know what you're getting into. Find step-by-step guides for filing for the different types of bankruptcy, as well as any pitfalls and legal challenges you might run into in the process.

Frequently Asked Questions

  • What is bankruptcy?

    Bankruptcy is a legal process designed to help individuals and companies get a financial fresh start by discarding or making arrangements to repay unmanageable debt. It allows people who can no longer pay their debts to liquidate assets or create a repayment plan, ultimately removing the debts. While there are several different types of bankruptcy and different qualifying factors for each, the end goal is the same: to be discharged from debts and get a financial fresh start.

  • How long does bankruptcy stay on your credit report?

    Filing for bankruptcy can impact your credit. If you filed for protection using Chapters 7, 11, 12, or 13 of the Bankruptcy Code, the information will remain on your credit report for up to 10 years from the date of when the request was filed. That being said, the impact bankruptcy will have on your credit will decrease as time passes and as you add positive information to your credit report. In some cases, the information can be reported for longer than 10 years.

  • How do you file for bankruptcy?

    To file for bankruptcy, a person, couple, or corporation must file a petition to the bankruptcy court. This is how a bankruptcy case will begin. All bankruptcy cases are accepted and managed in federal courts under specific regulations outlined in the U.S. Bankruptcy Code.

  • What is Chapter 7 bankruptcy?

    Chapter 7 bankruptcy eliminates most debt through the liquidation of assets. The court appoints a trustee to oversee your case, and part of the trustee's job is to take ownership of your assets, sell them, and distribute that money to your creditors. Chapter 7 bankruptcy is the most common type of bankruptcy in the United States.

  • What is Chapter 13 bankruptcy?

    Chapter 13 bankruptcy allows a debtor to seek shelter from creditors and set up a debt repayment plan while protecting their assets from liquidation. It is a common type of bankruptcy, but it's only available to individuals with sufficient income to stick with the repayment plan.

Key Terms

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What to know about bankruptcy discharge of debt. A bankruptcy discharge is a court order that relieves you of your obligation to pay a debt following a bankruptcy hearing case While collectors are prohibited from taking collection action on a discharged debt, they can still repossess and sell any property attached to a loan Credit card debt, medical bills, and personal loans are a few types of debt with a good chance of being discharged Child support, fines resulting from criminal activity, and student loans are debts that can’t be discharged under Chapter 7 bankruptcy
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