What is Bankruptcy?

Federal bankruptcy law (Title 11 of the United States Code, otherwise called the "Bankruptcy Code") was enacted to allow the honest debtor, who is unable to meet his/her financial obligations, to obtain a fresh financial start or to reorganize his/her financial affairs. Bankruptcy law accomplishes this goal by providing debtors with a legally enforceable mechanism through which they may: (1) eliminate, reduce and/or extend most debt, and (2) protect themselves, subject to certain qualifications, during the bankruptcy case, from pursuit and harassment by their creditors. At the same time that bankruptcy law seeks to give relief to the debtor, it is also the goal of bankruptcy law to deal equitably with a debtor's creditors by: (1) protecting the creditors against fraud, (2) treating similarly situated creditors in an equal manner, and (3) providing the creditors with constant notice and an opportunity to be heard during the bankruptcy case.

Who can file for Bankruptcy Protection?

With only certain limited exceptions, an individual (alone or together as a married couple) or a business (a sole proprietorship, partnership, or corporation) may file for bankruptcy protection. While debtors filing for bankruptcy protection are usually "insolvent" (meaning that they are either unable to pay their debts as they become due, or that their liabilities are greater than their assets), insolvency is not a requirement for a voluntary bankruptcy filing.

What are the potential benefits of Bankruptcy?

A bankruptcy filing is often used as follows:

• by individuals to eliminate overwhelming credit card debt, medical bills, and other types of debt;
• by individuals or businesses to save their house or other real property from foreclosure or to save their car or other assets from repossession;
• by businesses, under a cash flow squeeze to obtain a "breathing spell" from their creditors in order to reorganize their financial affairs or to sell off assets;
• by individuals or businesses to extend or resolve burdensome tax liability; and
• by businesses to stop eviction from leased real property or repossession of leased equipment.

The above uses of bankruptcy are not exclusive and bankruptcy can be used for other purposes. However, an individual or business contemplating filing a bankruptcy case should carefully review their goals with a credit councilor or bankruptcy attorney simply because bankruptcy law can be complex.

General Advice
Please click here or on the mail box below to obtain general advice about your legal options regarding financial hardship and give you options to avoid filing for bankruptcy. Please give us your:
1) Name
2) E-mail address and/or phone number
3) Town and County in which you reside
4) A brief description of the financial difficulty you are having.