Are you overwhelmed with debt?  Are your unpaid bills piling up?  Are creditors or bill collectors hounding you for payment?  Are collection agencies calling?  Have you been sued, or has a creditor gotten a judgment against you?  Are your wages or bank accounts being garnished?  If so, declaring bankruptcy may be an option for you to consider.

Consumers have two options under the law for declaring bankruptcy: Chapter 7 and Chapter 13.  Chapter 7 is a total liquidation of debt that wipes the debtor’s financial slate clean and allows the debtor to get a fresh start.  Chapter 13 sets up a repayment plan that allows the debtor to pay down debts over the course of 3 – 5 years.  Declaring bankruptcy under either chapter will stop collection efforts and garnishment.  If funds were garnished within 90 days of the date of the filing of the bankruptcy petition and all of the garnished funds are exempt, then the debtor might be able to get the garnished funds back.  The remainder of this article applies primarily to a Chapter 7 bankruptcy.

To initiate a bankruptcy, you file a bankruptcy petition and  accompanying schedules in the appropriate federal court.  The petition and accompanying schedules list all of your creditors, all of your debt, as well as information about your property, assets, and income.  A debt that is not listed on your bankruptcy petition is not discharged in bankruptcy.  In other words, you will remain personally liable for a debt not listed on your petition.  However, if you missed a creditor, you can add that creditor after you file your bankruptcy petition.

After you declare bankruptcy, your property becomes part of what is called your bankruptcy estate.  The bankruptcy estate is administered by the bankruptcy trustee, an attorney appointed by the bankruptcy court to supervise your bankruptcy estate.  The trustee will sell the property in your bankruptcy estate and distribute the proceeds to your creditors.

However, not all property automatically becomes part of your bankruptcy estate.  The law provides that certain property is exempt.  If you want to keep a certain item of property and that item of property is not exempt, you can either reaffirm the debt or buy the property back from the bankruptcy estate.  Most commonly, perhaps, a debtor owns a vehicle and wants to retain that vehicle rather than have it become part of the bankruptcy estate.  In that case, the debtor would reaffirm the debt by promising to continue making payments.  Alternatively, you can buy the property back from the trustee.  If, for example, you own a parcel of land in addition to your homestead, that parcel would become part of your bankruptcy estate.  However, you can buy the parcel back from the trustee and remove the parcel from your bankruptcy estate.

Not all debts are dischargeable in bankruptcy.  For example, back taxes, child support and alimony, fines, and student loans, among other kinds of debt, are generally not dischargeable.   However, after you receive a bankruptcy discharge, your personal liability for all dischargeable debts listed on your bankruptcy petition will be eliminated.

Baland Law Office, P.L.L.C. represents consumer debtors in both Chapter 7 and Chapter 13 bankruptcy proceedings.  Please call (763) 450-9494 to schedule an appointment to discuss your situation today and find out whether declaring bankruptcy is the right option for you!

DISCLAIMER: Baland Law Office, P.L.L.C. is a debt-relief agency, and Timothy H. Baland, Esq. is a debt-relief agent.  We help people like you to obtain bankruptcy relief.

WARNING: The information contained in this article does not constitute legal advice and may not be applicable to your situation.  Reading this blog post does not create an attorney-client relationship between you and Baland Law Office, P.L.L.C.  You should always discuss your situation with an attorney before taking any action based on what you may read in this blog.  To that end, please call (763) 450-9494 to set up an appointment to discuss your situation.



This really got me wondering if I would ever be able to repay the debt in case I have to take one! It was a rather eye-opening information and I really thank you for sharing it with us. I will be sure to remember this whenever deaing with financial matters.


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