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By Melanie Votaw
Bankruptcy law is a federal law that assists individual consumers and businesses facing financial difficulties. For consumers, the goal of bankruptcy is to help individual debtors get past financial turmoil and make a fresh start.
The Process
First, a petition is prepared which contains your assets, debts, creditors, monthly income, monthly expenses, and other financial information. (You must include all of your creditors in the petition.)
Next, the petition is filed with the court, and you are granted an automatic stay which prohibits creditors from harassing you. Your creditors cannot attempt to collect any money from you or obtain property, start or continue any lawsuits or foreclosures, freeze your bank accounts, or garnish your wages. Creditors must also stop making threatening phone calls or sending collection letters.
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Your Spouse
You can file bankruptcy separate from your spouse or jointly with your spouse. Your lawyer will help you decide which is best for you.
Your Credit Report
Your credit report will show your bankruptcy filing for up to ten years. However, this does not mean you will never obtain credit again. Many lenders in the credit card and mortgage industry do not automatically disqualify an applicant because of a previous bankruptcy filing. Of course, anyone who is behind on payments already has a poor credit rating. For that reason, bankruptcy is sometimes the best solution.
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