Bankruptcy
Bankruptcy
Bankruptcy is a legal process that offers individuals and businesses overwhelmed by debt an opportunity to gain financial relief, either by eliminating certain debts or creating a structured repayment plan. In the United States, bankruptcy is governed by federal law and handled in specialized courts. The two most common types for individuals are Chapter 7 and Chapter 13. Chapter 7, or liquidation bankruptcy, involves the sale of non-exempt assets to pay off creditors, after which most unsecured debts—such as credit card bills and medical expenses—are discharged.
Chapter 13, often called a wage earner’s plan, allows individuals with regular income to reorganize their debt and repay it over three to five years, often without losing property. Businesses typically use Chapter 11 to restructure and continue operations. Filing for bankruptcy triggers an automatic stay, which immediately stops creditor collection efforts, wage garnishments, foreclosures, and lawsuits.
Chapter 7
Chapter 7 bankruptcy, often called "liquidation bankruptcy," allows individuals to eliminate most unsecured debts, such as credit cards and medical bills. In this process, a court-appointed trustee may sell non-exempt assets to pay creditors. Chapter 7 is ideal for those with limited income and few valuable assets.
Chapter 13
Chapter 13 bankruptcy, also known as a "wage earner’s plan," allows individuals with regular income to reorganize their debts and create a repayment plan lasting 3 to 5 years. It can help stop foreclosure, protect assets, and catch up on overdue bills while keeping property intact.
Credit Card Lawsuits
When borrowers fall behind on credit card payments, lenders may file lawsuits to recover the debt. Legal defenses can challenge the creditor’s claims, address improper documentation, or negotiate settlements to avoid harsh court judgments.
Creditor Harassment
Federal law, including the Fair Debt Collection Practices Act (FDCPA), protects consumers from aggressive or abusive collection tactics. If creditors are calling constantly, threatening legal action, or using deceptive practices, legal help can stop the harassment and enforce your rights.
Debt Defense
Debt defense involves challenging the validity or amount of a claimed debt in court. Common defenses include statute of limitations, mistaken identity, lack of documentation, or already-paid debts. Skilled legal representation can help reduce or dismiss claims.
Debt Settlement
Debt settlement is a negotiation process where you or your attorney works with creditors to accept a reduced payoff amount. It’s often used as an alternative to bankruptcy and can help you avoid long-term damage to your credit when done strategically.