There are specific chapters of the federal bankruptcy law. US bankruptcy Court proceedings for individuals are usually files under Chapter 7 which is known as straight bankruptcy, and involve taking most of the borrower's property. Basically, the court appoints a trustee to sell off the assets and distribute the cash among the creditors. Proceedings under Chapter Thirteen (known as wage earner's bankruptcy) involve the borrower proposing a plan for repaying a portion of the debt in installments from the borrower's income. Chapter Eleven of the federal Bankruptcy Act is generally used by corporations and not by consumer debtors. Its proceedings are expensive and complex. Consumer debtors normally use Chapter Seven or Chapter Thirteen.Once the US bankruptcy court process ends, the borrower is no longer liable for their debts. This occurs when the bankruptcy court enters a discharge order in a Chapter Seven case or the borrower has paid the debts due to the credit grantors according to a plan in a Chapter Eleven or a Chapter Thirteen case. What this means is that the court has discharged the borrower from the
debts that they incurred. The borrower then starts over again with a clean financial slate, but the record of the bankruptcy will remain on the borrower's credit record for up to ten years; which can cause problems with some creditors and lenders.
Bankruptcy may be the best or only, solution for those suffering from extreme financial hardship. However, it should be utilized exclusively as a last resort, since it always has long lasting consequences. Be sure to consult a bankruptcy lawyer before resorting to filing bankruptcy as a means of solving your economic troubles because it is not a good to ever go into US bankruptcy court representing yourself as you are not as familiar with bankruptcy laws as lawyers are.
