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Bankruptcy: How it Works

Bankruptcy is a federal court process designed to help you either eliminate your debts or begin to repay them under court supervision. Declaring bankruptcy provides an opportunity to get a fresh financial start when you are struggling with an overwhelming amount of bills.

The most common type of personal bankruptcy is called Chapter 7 and the process can take 4-6 months to complete. The first step is to file a petition for bankruptcy. Once creditors are made aware that you have filed, they must immediately cease all collection efforts. The courts will mail them a notice of your petition. You can also contact your creditors directly and provide them with your case number.

A month or more after filing your bankruptcy petition you are required to attend a Federal Court hearing. Unless a creditor or a United States Trustee objects, you will only make one court appearance. These appearances can now be done by Zoom.

A bankruptcy will be listed on your credit report and there are costs to file. The ability to get credit again soon is limited but generally, within two years your credit score can improve dramatically.

Filing for personal bankruptcy can be a difficult decision to make, but it can be the right one for people struggling with burdensome debt. 

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