If you are over your head in debt, the Bankruptcy Law can help you by protecting you from your creditors. When you file bankruptcy, a Court Order is mailed to each of your creditors telling them to stop any action to collect their debt from you. While this Order is effect, your creditors cannot call you or write your, and they must stop any garnishment they have against your wages.

Many people think they will lose their property if they file for bankruptcy. That is usually not the case. The law specifies certain types of property as exempt, or in other words, as the type of property you can keep even though you are going bankrupt. Most of these exemptions have a specific maximum value. For example, you can keep jewelry up to $500.00 in value if you go bankrupt. Other exemptions, such as professionally prescribed health aids, have no limit on value. An attorney can tell you if a certain item is exempt and if there is any limit on the value of the exemption. Even your house and car may be exempt if your equity in each of these items is below a certain specified amount.

Some of your property may be subject to a security agreement. Your house may be subject to a mortgage, or your car may be subject to a lien. If you file bankruptcy and have a secured debt, you have several options. You can keep the item, and agree to continue paying for it. This is called reaffirming the debt. Another option is to surrender the collateral. If you choose to surrender the collateral, you do not owe anything further to that creditor. This is a helpful option if the value of the collateral is less than what you owe on it.

The purpose of a bankruptcy is to cancel your legal obligation on your debts. This is called a "discharge" of your debts. Certain debts are not dischargeable. Child support and maintenance obligations are not dischargeable. Taxes and student loans are dischargeable only under certain narrow circumstances. You should consult with an attorney to determine if a particular debt is dischargeable.

There are several different types of bankruptcy which you can file. When most people talk about bankruptcy, they are talking about a Chapter 7 or a "straight liquidation" bankruptcy. Another type of bankruptcy is the Chapter 13 or "wage earners" bankruptcy, in which a portion of your monthly income is turned over to a trustee to be distributed among your creditors. Yet another type of bankruptcy is the Chapter 11 or "reorganization" bankruptcy. Although this type of bankruptcy is normally associated with large corporations, it is also available for individuals engaged in business. An attorney can help you decide if there is a type of bankruptcy which is appropriate for your circumstances.

Unlike negative credit information, which can remain on your credit report for up to seven years, a bankruptcy can remain on your credit report for ten years. An attorney may be able to suggest ways of avoiding bankruptcy, such as negotiating with your creditors. A creditor may agree to accept less than the full amount of the debt if the creditor is aware that they will get nothing in a bankruptcy. To learn about filing a personal Chapter 7 bankruptcy, see the Legal Information Topic titled "How Do I File For Bankruptcy?"