Personal Bankruptcy

The United States Bankruptcy Code defines two kinds of bankruptcy for consumers with debt problems. This fact sheet is not meant to define all options of bankruptcy, but merely to summarize the major differences. It is advisable, though not required, to consult an attorney.

Chapter 7 is a straight bankruptcy under which financial information is presented to the court to prove that you are unable to pay your debts. There are rules regarding what property you would be allowed to keep and what property would be divided among your creditors. Most debts would be discharged, but some would not be forgiven.

Chapter 13 bankruptcy, also known as a Wage-Earner Plan, is a court-approved repayment plan. Financial information is presented to the court proving that you would be able to repay your debts under alternative arrangements, but not under the original contractual agreements with your creditors. Usually finance charges, wage garnishments, attachments and foreclosure proceedings are suspended while you repay some or all of your indebtedness over a number of months.

Since bankruptcy can remain in your credit file for up to 10 years, a bankruptcy filing can seriously affect your ability to obtain or re-establish credit.

For information about bankruptcy filing procedures:

Attorney Referrals:

For help in finding an experienced bankruptcy attorney in other counties, contact the county Bar Association in the county in which you live.

For low cost legal assistance for consumers meeting certain low-income guidelines:

The above information should be understood to be a general discussion of the subject matter and DOES NOT constitute a legal opinion about the situation. For further information please consult a qualified attorney.

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