Bankruptcy 101 (United-States)
Bankruptcy is a process by which consumers can eliminate or repay some, or all, of their debts under the protection of the federal bankruptcy court. Generally, bankruptcy takes one of two forms — liquidation or reorganization.
In the short term, bankruptcy prevents continued efforts by creditors to collect debts. In the long term, bankruptcy can eliminate repayment obligations or provide for a restructuring of the debtor’s obligations, thus enabling the debtor to obtain a fresh start.
Alternatives to Bankruptcy
It is often said that bankruptcy should be a “last resort” for financially troubled consumers. This advice is oversimplified. In some cases, legal rights can be lost by delay. It is especially important to get early advice about bankruptcy if you are hoping to use the bankruptcy process to help save a home or a car. While bankruptcy can prevent a foreclosure or repossession, bankruptcy usually cannot help once the sale process has been completed and your property interest in the collateral has been terminated under Florida law.
In some situations, however, it may make sense to explore alternatives to bankruptcy. Such alternatives may include an out-of-court settlement with creditors, mortgage modifications or negotiating a reduction of payments to creditors.