Raleigh Bankruptcy

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What is Bankruptcy

Bankruptcy is a proceeding under Federal Law (title 11 of the United States Code) in which a person can be relieved from the legal responsibility to repay some or all of his or her debts. The primary goal of most bankruptcy filings is to obtain a “discharge,” which is often spoken of as getting a “fresh start.” Being overextended can be debilitating and often leads to medical conditions, depression, marital problems, and prevents individuals from meaningfully contributing to society. Notwithstanding what a debt collector might tell you, bankruptcy is fundamentally a part of the American legal system, and is specifically provided for in the Constitution of the United States (Article I, Section 8, Clause 4). It is also modeled after the Biblical debt relief found in Deuteronomy 15. Filing of a bankruptcy case immediately prohibits your creditors’ continued efforts to collect debts through operation of an “automatic stay.” This automatic stay is replaced later by a discharge injunction or “discharge,” which is entered at the conclusion of your case. The bankruptcy code was significantly revised in 2005; however, those changes have not significantly affected the ability to file for bankruptcy relief.

What Types of Bankruptcy Are Available for Individuals?

There are several types of bankruptcy provided for in Title 11, but those available to an individual are limited to Chapter 7, Chapter 11, Chapter 12 and Chapter 13 (each gets its name from its specific chapter in Title 11 of the United States Code). Although there are four types of bankruptcy an individual may use chapter 7 and chapter 13 are used far more often to obtain relief from debts and obtain a “fresh start.” chapter 12 is designed for family farmers and family fisherman, chapter 11 is often very expensive, and is primarily geared towards businesses or individuals that exceed the debt limits of chapter 13.