Bankruptcy Basics – Part 1: Introduction

The following program was produced by the United States Courts.

If you are considering bankruptcy, this video will give you basic information about the process, the relief it offers, and how to find the legal help you may need. Thank you for watching this video on bankruptcy basics. This video will explain what bankruptcy is and what happens in a bankruptcy case. This information is provided to help consumers. Individuals like you understand the bankruptcy process.

People who are having trouble paying their debts sometimes consider bankruptcy as a remedy for this situation. Bankruptcy is a legal process by which you can deal with your debts when you can no longer pay them.

By filing bankruptcy many individuals find that they’re able to get most, if not all, bills discharged meaning wiped out, keep most if not all of their property, and or get extra time to pay bills if you have a regular income. An individual, called a debtor, usually files bankruptcy to obtain a discharge which will wipe out all or most of his or her debt, so they will not have to be paid.

A person may file alone or with the person’s spouse. Once the bankruptcy begins creditors cannot try to collect debts from the bankruptcy debtor or sue the debtor to obtain a judgment. With a few exceptions, the creditors have no claim on the debtor’s future income or future assets.

Bankruptcy is not the only way to deal with too much debt. In some situations, another approach might be better. Alternatives may include an out-of-court settlement with creditors, reduction of payments to creditors, obtaining help from a Consumer Credit Counseling Service, or payment of debts by selling or borrowing on property. These alternatives however require some cooperation from creditors and are more likely to succeed if tried soon after financial difficulties begin.