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Bankruptcy law is a federal law
designed to assist individual consumers and businesses facing
financial difficulties. With respect to consumer debtors, the
goal of bankruptcy is to help individuals get beyond their
financial turmoil and obtain a fresh start.
The bankruptcy process involves preparing a petition that is to
be filed in federal court. The petition contains information
concerning an individual's assets, debts, creditors, monthly
income, monthly expenses and financial information. The debtor
must include all of its creditors in the petition. Upon the
filing of a petition, the court grants the debtor with an
automatic stay. The automatic stay is a provision in the
bankruptcy law that prohibits creditors from harassing debtors.
Specifically, creditors are prohibited from attempting to
collect money or obtain property, starting or continuing
lawsuits or foreclosures, freezing bank accounts and garnishing
a debtor's wages. In addition, creditors can no longer make
threatening phone calls or send collection letters to a debtor.
For a debtor that is married, it is not required that their
spouse file bankruptcy also. Rather, any decision concerning a
potential joint bankruptcy filing should be evaluated on the
circumstances of a particular case at issue.
An individual's bankruptcy filing can be reflected on their
credit report for up to ten years. That does not mean, that an
individual will not obtain credit again. Many lenders in the
credit card and mortgage industry do not automatically
disqualify an applicant because they previously filed
bankruptcy. In addition, it is important to note, that if
someone is behind on their bills their credit rating may already
be poor. Filling bankruptcy is often the last option but none
the less it serves as an opportunity to remove the burden of
debt of one's shoulders and start over fresh.
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