Written by Jasir Jawaid
Chances are you've heard of the term "bankruptcy" but may not be sure what it is. In general, bankruptcy is a legal process by which people can get rid of some or all of their debt. It is a way for people to get a fresh start after struggling with debt for a long time.
When you file bankruptcy you are typically required to list all your debts and assets. In most cases, you will receive a bankruptcy discharge that cancels your obligation to pay all of the debts listed on your bankruptcy petition with the exception of certain types of debts that are not dischargeable. An example of nondischargeable debt includes student loans. In addition, filers cannot have priority debts like spousal support and child support discharged either.
Once you receive a discharge from the bankruptcy court you must continue to make your regular payments to any creditors that have not agreed to accept the settlement terms of the bankruptcy. If you fail to make your payments the court may order you to do so or put a lien on your property to cover the cost of your debt.
There are two main kinds of bankruptcy in the U.S. — Chapter 13 and Chapter 7.
This article was published on JoyWallet and can be read here in full.