Bankruptcy is a means provided by the federal government in which to get protection from debt collectors and a way to get out of debt. This can happen through a Chapter 13 bankruptcy, also known as reorganization of debt. It can also be done through a Chapter 7 bankruptcy, commonly known as liquidation.
In a Chapter 13 bankruptcy, a filer pays back all or some of their debts over a three or five year payment plan. A Chapter 7 bankruptcy uses federally set allowances for the bankruptcy filer to keep a certain value of various personal and household belongings. If the filer has above and beyond the set value, the property is then sold by a trustee to pay back all or some of their debts. If no property or not enough property is available, then the bankruptcy filer is federally cleared of their debts through filing bankruptcy and having their bankruptcy discharged.
Once someone has filed bankruptcy they are covered by federal laws that prohibit debt collectors from contacting them regarding their debts. This protection is known as the automatic stay, which goes into effect as soon as the bankruptcy case is filed. If a debt collector continually ignores this law, they can be fined up for each instance they contacted the debtor by phone, mail or email.
If you need help with a bankruptcy, contact a lawyer Lake of the Ozarks.