Bankruptcy Law

Bankruptcy laws were enacted to enable someone who is in a great amount of debt to be released from personal liability for specific debts. In other words, the debtor is no longer legally required to pay the debts that the court rules as discharged. Our country is experiencing an unbelievable downward economic spiral. While measures are being taken to bail out Wall Street, those living on Main Street are bearing the burden. Every day, we see more and more of our neighbors losing their jobs, falling behind on their mortgages, and drowning in debt that they never imagined. A few years ago, most never believed that they’d be in this situation, but as the economy drops and unemployment increases, people are losing their homes, their cars, and their way of life.

Thankfully, the U.S. Bankruptcy Code is there for times just like these. In the U.S., bankruptcy is governed by a federal law adopted in 1898 and amended many times, such as with the Bankruptcy Reform Act of 1978 and in the spring of 2005. In 1934, the Supreme Court wrote about the purpose of the bankruptcy law: “It gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” The fundamental goal of the federal bankruptcy laws is to give debtors a financial “fresh start” from burdensome debts. This goal is accomplished through the bankruptcy discharge, which releases debtors from personal liability from specific debts and prohibits creditors from ever taking any action against the debtor to collect those debts.

Once a judge declares a bankruptcy discharged and you are released from debt, you’ll feel relief from harassing creditors and debt collectors because the discharge is in fact a statement to your creditors to expect less money from you in repayment. Certain actions from creditors must cease immediately, such as car repossessions, mortgage foreclosures and other law suits from creditors or others to whom you owe money, all the overdue debts are written off, and a third party is put in charge to administer the decision-making process.

It’s possible to wipe the slate clean or to restructure your debt, to get out of your upside down mortgage, and to keep your creditors at bay. Is bankruptcy a solution for you? Complete the short form below and take the first step in reclaiming your future.

Chapter 7 Explained: Confused about the meaning of Chapter 7 of the U.S. Bankruptcy Code? Visit the Chapter 7 Explained Center

Deciphering Chapter 13: Chapter 13 bankruptcy differs from Chapter 7 in a number of crucial ways. Learn more about Chapter 13 bankruptcy.

Terms to Know: Information is power. That’s why we’ve taken key bankruptcy terms and defined them in a way that everyone can understand in this glossary of bankruptcy-related terms.