Bankruptcy in the United States is governed by federal laws designed to help people clear their debt and get a fresh start. There are several different “Chapters” in the bankruptcy code that provide debtors with relief from their creditors. Here is a list with their usual purpose:
- Chapter 7 Bankruptcy – Personal bankruptcy cases used to clear unsecured debt
- Chapter 9 Bankruptcy – Used by municipal governments
- Chapter 11 Bankruptcy – Reorganization of corporate debt, sometimes used by individuals with high net worth
- Chapter 12 Bankruptcy – Reorganization of debts used by family farmers and fishermen
- Chapter 13 Bankruptcy – Reorganization of debts with a payment plan attached, used by individuals
- Chapter 15 Bankruptcy – Used for international cases, helps foreign debtors clear their US debts
The laws are set up to allow debtors to get relief from most of their unsecured debt (credit card bills, medical bills, etc). Secured debt (home mortgage, car loans, any loan that has collateral) on the other hand will still have to be paid. In some cases, some of the secured debt might be restructured to better fit the needs of the debtor. This can be done with all secured debts, except a first mortgage on your primary residence.
Information about the bankruptcy process is available in more detail on this site. But applying it to your individual situation without the help of a bankruptcy attorney is not the best plan. Allmand Law can help you understand how bankruptcy laws will apply to your case and provide a plan that best suits your needs.