Bankruptcy is a court proceeding that involves examining your assets and debts. The court decides if you have the means to pay all, some or none of your debt. Filing bankruptcy is a serious step with long-term credit and financial consequences, so it should be used as a last resort.
Chapter 7 is the most common form of bankruptcy used by both individuals and companies and requires surrendering your assets to eliminate debts. When you file a chapter 7, this usually means that all collections against you will stop from creditors. Any continued creditor action should be reported to your attorney. After 40 days, you will meet with your creditors to answer questions under oath. If the bankruptcy is accepted, you will be relieved of personal responsibility.
Chapter 13 is another common form of bankruptcy. This type requires a repayment plan lasting three to five years to pay back all or a portion of the amount owed. You make monthly payments to a court trustee, who pays the creditors. After the set amount of time, your remaining debts are discharged. Chapter 13 bankruptcy can allow you to keep some of your property, such as your house and car.
It is always a good idea to hire an attorney to help you with your petition!