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A Fresh Start
Individuals or corporations in financial crisis who are unable to pay their debts may file bankruptcy to get a fresh financial start. Once bankruptcy has been filed, a debtor's debts are effectively put on hold while the case is pending, and creditors can no longer legally attempt to collect what they are owed until the bankruptcy has been processed. This includes phone calls and letters.
Once the case has been reviewed, the trustee in the case may order you to pay some of your debts or surrender some of your property. The amount of debt that is forgiven ("discharged") can vary greatly from case to case. A properly filed bankruptcy will often allow an individual to eliminate much of his or her debt, keep his or her home and/or car, stop wage garnishment and collector harassment, and restore or prevent termination of utility services. Also, bankruptcy offers filers the chance to challenge the claims of creditors who have committed fraud or are trying to collect more than they are owed.
What Will Filing For Bankruptcy Allow Me to Keep? (Exemptions)
Even after filing for bankruptcy, it is possible for you to keep many of your possessions. These "exempt" items vary with the type of bankruptcy, but see the box in the middle of the page for some examples.
Other Valuable Facts Regarding Exemptions
- Creditors may be entitled to inheritance, property settlement, or life insurance benefits you receive within 180 days of filing bankruptcy.
- The allowable monetary value of exemptions for an individual is doubled when a married couple files bankruptcy together.
- Exempting the equity someone has in their home or car is different from exempting the actual home or car. When exempting equity, the filer is only protecting what he or she already paid on their investment.
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