Just what is bankruptcy? Will it wipe away all my debts?
Bankruptcy is a federal court process created to assist consumers and companies eliminate their debts or repay them under the protection of the bankruptcy judge. Bankruptcies can generally be described as "liquidation" (Chapter 7) or "reorganization" (Chapter 13). Under a Chapter 7 bankruptcy, you ask the bankruptcy judge to wipe out (release) the debts you owe. Under a Chapter 13 bankruptcy, you file a plan using the bankruptcy court proposing just how you'll repay your creditors. You must repay some debts in full; others may be repaid only partially or perhaps not at all, based on everything you can afford. For lots more information, see What's Bankruptcy?
Whenever you file either type of bankruptcy, a judge purchase called an "automatic stay" goes into result. The automated stay forbids most creditors from using any action to gather the debts you owe them unless the bankruptcy judge lifts the stay and lets the creditor continue with collections. For more information, see just how Bankruptcy Stops Your Creditors: The Automatic Stay.
Particular debts cannot be discharged in bankruptcy; you will continue steadily to owe them just as if you had never filed for bankruptcy. These debts consist of back kid support, alimony, and specific types of taxation debts. Student loans will not be discharged unless you can show that repaying the financial obligation would be an undue burden, which is an extremely tough standard to fulfill. And other types of debts might not be released if a creditor convinces the court that the debt should survive your bankruptcy. For lots more information, see exactly what Bankruptcy Can and Cannot Do.