Declaring Bankruptcy – What does it mean?

 You hear in the news that companies have declared bankruptcy or perhaps a friend has declared bankruptcy. Declaring bankruptcy simply means that you cannot repay some or all of your debts and you are asking the U.S. Bankruptcy for protection and structured way to handle these debts.

Bankruptcy will stop most creditor collection efforts including creditor calls, lawsuits, wage garnishments, sometimes foreclosure, and repossession. In some case, Bankruptcy with eliminate debts entirely. In other cases, the debtor enters into a repayment plan where some or all debts, depending on the circumstance, are paid back to the creditors in exchange for a discharge of those debts.

What is very important to note is that the creditors must follow the bankruptcy court rules and federal laws instead of contacting you directly and chasing you for money.