Function

• Bankruptcy is allowed under federal law to allow people burdened by debt to be released from their debts or to work out a payment plan with their creditors.
  
  

Benefits

• Filing for bankruptcy can stop all collection activities, including foreclosures, phone calls and wage garnishments.
  
  

Types

• In a Chapter 7 filing, the proceeds from the sale of your non-exempt property will be distributed to creditors, and all of your eligible debt will be discharged.
  In a Chapter 13 filing, you will have to pay some or all of your debt. The filing will set up better terms and payments for debt not discharged.
  
  

Time Frame

• Bankruptcies remain on your credit report for 10 years and can affect your ability to secure loans or credit cards.
  
  

Misconceptions

• Certain debts, like student or government loans and back taxes, are not eligible for discharge in a bankruptcy.
  
  

Considerations

• Filing for bankruptcy is a legal process with serious consequences. Become informed and understand everything you are agreeing to as you move through the process.