Collection: BANKRUPTCY

Bankruptcy law is a specialized federal process designed to give individuals and businesses a fresh financial start by legally eliminating or reorganizing their debts. The process is administered by a federal bankruptcy court and revolves around a legal filing—the Petition—which immediately triggers an Automatic Stay, halting all creditor collection efforts, including lawsuits, wage garnishments, and foreclosure actions. The most common forms are Chapter 7 (Liquidation), which eliminates unsecured debts like credit cards and medical bills after the court-appointed Trusteesells non-exempt assets, and Chapter 13 (Reorganization), which allows debtors with regular income to repay some or all of their debts over a three-to-five-year period through a court-approved Repayment Plan. Throughout the case, the Trustee and creditors review the debtor's assets, income, and debt schedules, often resulting in motions for relief from the stay by secured creditors seeking to repossess collateral, or objections to the debtor's ultimate Discharge if fraud or serious misconduct is alleged. The end goal is the Discharge Order, which permanently releases the debtor from the obligation to repay most pre-petition debts.