Bankruptcy is a legal process whereby an individual or business attempts to either eliminate or reorganize their debt so they may move forward with a ‘fresh start.’ This course of action can allow debtors to stop foreclosures and repossessions, end harassing creditor phone calls, stop creditor lawsuits and eliminate debt.

The legal code that dictates how people take advantage of this course of action does not require an individual or a business to retain a bankruptcy attorney to represent them; however, the Code is incredibly difficult and contains many nuances that an untrained individual may find overwhelming, complicated and even tiresome. Furthermore, it is a good idea to have a bankruptcy attorney with you when you attend the Creditors’ Meeting. This meeting is where a court appointed trustee will ask the debtor questions about personal questions about your finances and an attorney can advise you on how best to answer the questions.

While there are many chapters within the code, the most commonly used is Chapter 7, Chapter 11 and Chapter 13. The chapter you may be qualified to file depends upon certain criteria such as: are you filing as an individual or a business, is your goal to eliminate or reorganize your debt and whether or not you have the ability to pay back your creditors. An attorney can help the debtor determine the answers to these questions and then assist them to file the bankruptcy chapter that is most appropriate for their circumstances.

The most prevalent options for eliminating or reorganizing debt are to file Chapter 13 and Chapter 7. Chapter 13 is designed to be filed by businesses owned by a sole proprietor, but can be filed by an individual if certain requirements are met, and is advantageous for the debtor in that they can retain their business by agreeing to a plan of reorganization. The high point for the debtor in this arrangement is that they can stop foreclosure proceedings and may even be able to clear up any mortgage default proceedings brought on by missed payments. Generally, Chapter 13 requires the proprietor to repay all or a portion of the debt over a pre-determined time span which is normally between three to five years.

While many people feel that filing for Chapter 13 is a black mark against their name, life really does happen. They can find themselves in dire financial situations due to unexpected medical bills, family emergencies or unexpected layoffs; and discover that the only option available to them is to file a bankruptcy chapter in order obtain a fresh start on life. There is no shame in this course of action; however, in order to obtain the best results in such a life changing endeavor, procuring a reputable bankruptcy attorney who will assist one in the process is the first step toward freeing oneself from financial bondage.