Sometimes bad things happen to good people. One of these bad things can sometimes be bankruptcy. While many people have heard of it, not everyone knows exactly what it is. Here are some facts to learn about bankruptcy before calling a bankruptcy lawyer in Columbia, MD.
When a person has fallen upon hard times financially and can no longer pay their bills, they have the legal option of declaring bankruptcy. This option will help protect the person from their creditors and all others to whom they owe money. When bankruptcy proceedings are underway, the creditors are not allowed to pursue any further collection actions against the debtor. The debtor may have all or a portion of the debts discharged and a repayment plan may be put into effect so that the debtor can get caught up again.
The bankruptcy discharge is actually a legal proceeding taking place in front of a judge. The judge will determine that the debtor is, in fact, bankrupt and can no longer pay their bills. When this determination is made, the creditors will no longer be able to collect on any debts listed in the judgment nor will they be able to stake any claims against any future earnings that the debtor may earn.
There are two different types of bankruptcy, known as chapters. Chapter 7 is the most common and involves a liquidation of selected assets so that the debt in question may be paid as fully as possible. The other is Chapter 13 which is a restructuring of the debt. In this case, the debtor is allowed to keep most if not all of their possessions.
As you can see, bankruptcy is something that is serious in nature but also something that may want to be considered if you are facing extreme financial difficulties. Take the time to consider all of your options carefully.