Bankruptcy is a legal procedure that protects both individuals and businesses that are experiencing financial hardship and are unable to meet their financial obligations.

Chapter 7 Bankruptcy:

• Discharges debt
• Can be brought by individuals and small businesses

Chapter 13 Bankruptcy:

• Reorganizes debt
• Can be brought by individuals

ADVANTAGES OF FILING BANKRUPTCY:

• Allows you to take financial control over your life.
• Stops the harassing phone calls from debt collectors.
• Stops cars from being repossessed.
• Stops a foreclosure.
• Puts a hold on pending lawsuits and garnishments
• Chapter 7 allows you to wipe the slate clean and start all over by discharging your debt
• Chapter 13 can allow you to keep your house, car and/or other property without the worry of losing them to the court
• Monthly car payments may be reduced by filing a Chapter 13
• Certain other debt may be reduced by filing a Chapter 13.
• Chapter 13 may allow you to pay arrearages owed to mortgage company over an extended period of time so you can keep your house

WHAT KIND OF DEBT DO YOU HAVE?

Secured Debt: A  loan that requires the borrower to pledge property as collateral in return for receiving the loan.   Car loans and mortgage loans are examples of some of the most common secured loans.   Failure to pay a secured loan could result in the creditor taking back the collateral.

Unsecured Debt: A loan that does not require the borrower to pledge property as collateral.  Credit card debt and medical bills are examples of some of the most common unsecured debt that people accumulate.  Other examples are gym memberships and unsecured installment bank loans.  Failure to pay these bills, as required by the terms of the credit agreement, could result in the creditor suing you.