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Everyone deserves a second chance. Fortunately, U.S. law allows people to start over by wiping away many of their debts. If you are overloaded with debt and harassed by creditors, find out what your options are from a bankruptcy attorney. The attorney can give you straight answers to your bankruptcy questions and help you relieve the burden of debt.
Chapter 7 is one type of bankruptcy procedure designed to eliminate most debts. These procedures are called "chapter 7 bankruptcies" because they are outlined in chapter 7 of the Bankruptcy Code. Chapter 7 bankruptcies are also called "fresh start" or "liquidation" bankruptcies.
Chapter 13 (sometimes called a "wage earner plan") allows an individual to pay his or her debts over an extended period using a court-approved, supervised, and enforced payment plan. Not all creditors need be paid in full and unpaid amounts will be discharged (with some exceptions). Chapter 13 bankruptcy filers help create their own payment plans, which give them three to five years to pay personal debt from their disposable incomes (i.e., whatever is left after necessary expenses, like food and shelter, have been paid). In a Chapter 13 bankruptcy, individuals are often allowed to keep their property.
It depends on which kind of bankruptcy you file. In a chapter 7 bankruptcy, a person must list all of his or her property and debts. There are limits on the amount of property one can keep while still eliminating debt, although there are exemptions for certain types of assets (for example, your house or car). Under chapter 13, you may be able to keep most of your property.
After you have prepared and filed your bankruptcy paperwork, the court clerk will notify all of your creditors of your bankruptcy filing and inform them that they may no longer contact you. The clerk's notice will also include information about your meeting of creditors. If your creditors continue to pursue you after receiving notice of your bankruptcy, they are subject to sanctions by the bankruptcy court.
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