Bankruptcy is a legal process, authorized under federal law, in which a debtor may be relieved of his or her debts, thereby achieving a “fresh start' toward financial security. This process is strictly prescribed by federal statutes and rules, and is within the jurisdiction of a specialized federal court, the Bankruptcy Court.
There are two types of cases applicable to individual consumer debtors. The more common type is referred to as a “Chapter 7 case”, as it is authorized by Chapter 7 of the Bankruptcy Code, or bankruptcy statute within the United States Code. In a Chapter 7 case, the debtor is relieved of or “discharged” from his or her debts, without having to make further payments to creditors. In return, certain property of the debtor may have to be surrendered by the debtor for sale and/or distribution to creditors. Read more