If you are like most people, your personal finances have taken quite a beating over the last 2 years. They may in fact be so bad that you are considering filing for bankruptcy. But what does that exactly mean? This section will answer that question so you can be better informed.
Bankruptcy is simply the legal way to discharge your debts. However, since it involves the judicial system, you are required to use a bankruptcy lawyer. Even if you do not want to, you must use a lawyer to complete the proceedings since the bankruptcy laws were changed recently.
While most people know that they can voluntarily file for bankruptcy, not many people know that they can be forced to declare bankruptcy for their creditors. As a side note, if you are willing to work with your creditors, they will usually not force you into bankruptcy. On the other hand, if you ignore your creditors, you can almost guarantee that they will take you to court.
When you file for bankruptcy, the court will determine which chapter of bankruptcy you file under. The two most commons forms are Chapter 7 and Chapter 13.
Chapter 7 bankruptcy results in the liquidation of all of your assts. The court appointed representative then takes the money from the sale of your assets and pays back your creditors. Of course, the courthouse and your lawyer are one of the first ones to get paid. After the creditors have been paid back from the sale of your assets, the courts will discharge any remaining debts (with the exception of taxes and student loans).
If you are forced to file Chapter 13 bankruptcy, your assets will not be liquidated. Instead, the courts review your finances and set up a repayment plan for your creditors. If you can adhere to the repayment plan for three years, any remaining debts are then discharged.
This section provided you with a foundation for understanding the bankruptcy process; if you would like further information, feel free to visit the Dayton Attorney Guide.