October 18, 2017

What Is Bankruptcy?

Bankruptcy is a legal proceeding or case before a federal bankruptcy court under the federal bankruptcy law whereby a debtor is granted a partial or complete discharge of all dis-chargeable debts.  Upon the filing of the bankruptcy petition an initial order of relief is issued by the bankruptcy court.  This is also called an “Order of Automatic Stay”. This order is issued automatically and immediately which, with a few narrow exceptions, stops all creditor collection activities including law suits and foreclosures.

If a debtor has been a debtor in a chapter 13 bankruptcy proceeding that was dismissed within the previous year, a motion to keep this automatic stay from expiring in 30 days from the date of filing the bankruptcy must be filed.

The final order of the bankruptcy court is called the DischargeThis final order comes at the end of the case and permanently discharges all debts and obligations to pay that were owed at the time the case was filed.