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A Bankruptcy Primer—What It Is and What It Does

There seems to be a great deal of confusion about exactly what bankruptcy is and what it does for those who file. Some people believe that bankruptcy is an easy way to get rid of debt, while others believe that it is extremely difficult to file bankruptcy or receive a discharge. Neither of these extreme beliefs is true. Bankruptcy filing can be complicated, but with the help of a good bankruptcy attorney like those at the Oswalt Law Group in Phoenix you can take advantage of the protection offered by these laws.

What Is Bankruptcy?

The Bankruptcy Code of the United States provides protection for those who cannot pay their bills for whatever reason. If you lose your job, have a medical emergency or something else happens to cause you to get behind in your payments, the law provides protection for you from creditor actions. These laws are not intended to be a way for people to avoid paying legitimate debts; instead, they are designed to help those who are struggling with insurmountable debt and need relief from creditors who are trying to force them to pay. In order to obtain protection under the bankruptcy code, a debtor must file an action in a federal bankruptcy court. This can involve a great deal of paperwork, so many debtors choose to hire a bankruptcy attorney to help them with this task.

What Happens When I File Bankruptcy?

Once your bankruptcy petition is accepted, you will be granted a temporary stay to protect you from creditors while the court considers your case. This temporary stay will prevent your creditors from suing you, repossessing your collateral or foreclosing on your home. In the time covered by the stay, creditors are not allowed to contact you by phone or mail, harass you or file any legal actions against you including wage garnishments. The bankruptcy stay is not permanent. The court will review your case and will make decisions on how your creditors will be treated. In some cases, you may have to pay certain creditors some or all of the money you owe them, but in most cases your creditors will only receive a portion of what they are owed. In some cases, they may not receive any money, particularly if their debts are unsecured. Once the court determines the treatment of your creditors and enforces these decisions, you will be granted a discharge. After the discharge, your creditors can never again attempt to collect any portion of the debts they were owed. A bankruptcy attorney like those at the Oswalt Law Group in Phoenix can help you understand the complexities of filing a bankruptcy case and receiving a discharge for your debts.

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