• Bankruptcy proceedings are generally difficult. They are highly technical cases. The smallest misstep can lead to dismissal or the removal of certain rights. It is advisable to use a lawyer in these cases. Bankruptcy is a means of coming to an agreement with creditors about either eliminating or discharging certain debts in exchange for a new repayment schedule or the seizure of certain assets.
  
  

What Is the Difference Between Chapter 7 and Chapter 13?

• Chapter 7 is the most common form of bankruptcy. If a Chapter 7 petition is agreed upon by the courts, this means that most debts are eliminated or discharged, but certain assets can be seized by creditors. Chapter 13 does not wipe out the debt, but a court can decide on a new repayment schedule relative to the estimated future income of the petitioner.
  
  

What Are Exempt Assets?

• Exempt assets are those objects owned by a petitioner that cannot be taken by creditors. This class of assets is the domain of state governments. Florida, for example, does not permit the petitioner's home to be seized. Other states permit most of the value of the home to remain the property of the petitioner. Exempt assets often include a percentage of home equity, books, cars and jewelry.
  
  

What Is a Creditor Committee?

• In most bankruptcy proceedings, creditors have a voice. The court will appoint a trustee who is a neutral figure in charge of basic financial reorganization. The trustee helps choose the creditor committee, normally seven of the largest creditors in the case. This committee consults with the debtor over payment options and the reorganization of the debtor's finances. The committee is permitted to hire its own legal counsel.
  
  

What Is Chapter 12?

• Chapter 12 is a little-known part of the bankruptcy code. It makes bankruptcy easier for family farmers. It is a "stripped down" code that eliminates much of the complexity and difficulty in filing for bankruptcy. Most of the debt must be as a direct result of farming or fishing work and can be used only by those who work directly on the farms they own. Chapter 12 permits the farmer to reorganize his finances to a creditor committee against future crop income. Typically, the courts will mandate a three- to five-year repayment schedule.
  
  

What Is SCRA?

• SCRA refers to the Servicemember's Civil Relief Act of 2003 and is a part of the bankruptcy code. This law deals with members of the U.S. military who have troubled finances. It protects the assets of the military member when stationed overseas with the explicit purpose of putting the soldier's mind at ease over home affairs while in combat. In many cases, it postpones any creditor action against the soldier or sailor, and protects many servicemen from eviction.