The purpose of bankruptcy laws is to provide honest consumers with a fresh start in life. Depending on the circumstances of the case, consumers may file for chapter 7, 13, or 11. Once the bankruptcy petition is filed with the bankruptcy court, the “automatic stay” goes into effect. Creditors are then required by law to stop any form of collection activity against you, including phone calls, bills, and lawsuits.
Bankruptcy can stop a wage garnishment, repossession, bank levy, and can prevent foreclosure of your home. Tax debts can be discharged or restructured. Car payments can be lowered when your vehicle has depreciated in value. If you are behind on your mortgage, bankruptcy gives you the option of catching up over a period of 5 years with no additional penalties. Second mortgages or lines of credit can be avoided when your home is “underwater.” Bankruptcy is not shameful, quite the opposite, it is a constitutional right and a practical solution to your debt problems.