Bankruptcy
Law
The legal method for a debtor to "discharge" or relieve
debt. Bankruptcy is a way for individuals or businesses owing more
money than they can pay to either work out a plan to repay the money
over time or to have their debt wiped out. While no debtor is guaranteed
a total discharge, most debtors who file for bankruptcy are given
such relief. One of the primary purposes of the bankruptcy act is
to relieve the honest debtor from the weight of oppressive indebtedness
and to provide the debtor with a fresh start. Title 11 of the United
States Code regulates the filing of a bankruptcy. If the debtor
initiates the bankruptcy it is called a voluntary bankruptcy. If
the creditor initiates the bankruptcy it is called an involuntary
bankruptcy. In an involuntary bankruptcy the debtor has the opportunity
to contest the petition. While the debtor is either working out
a plan or the trustee is gathering the available assets to sell,
the Bankruptcy Code provides that creditors must stop all collection
efforts against the debtor. The Bankruptcy Code regulates what chapter
you must file under, what bills can be eliminated, how long payments
may be extended, what possessions you may keep, and all other details
concerning the bankruptcy.
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