In 1934, the Supreme Court stated in one of its opinions that bankruptcy represents an opportunity for the honest but unfortunate debtor to get a fresh start without being discouraged by previous debt. There are several different chapters in the Bankruptcy Code that allow individuals, married couples and businesses to get the fresh financial start that they need.

In many Chapter 7 bankruptcy cases, a debtor doesn’t have to appear in front of a judge to have his or her unsecured debt discharged. In a Chapter 13 case, a debtor will only have to meet with creditors in what is referred to as a 341 meeting. This meeting is held to give creditors a chance to question the person who is filing for bankruptcy and is held at the trustee’s office.

According to the Bankruptcy Code, Chapter 7 bankruptcy provides for liquidation of property and complete discharge of many unsecured debts. Chapter 13 bankruptcy allows for a debtor to reorganize his or her debt and repay it over time. Chapter 9 bankruptcy is reserved for municipalities that need debt relief while Chapter 11 bankruptcy is reserved for businesses that wish to reorganize.

Those who are considering filing for bankruptcy may wish to consult with a bankruptcy attorney prior to doing so in order to learn about the requirements of each, including the means test associated with Chapter 7. In the event that a debtor is in the military, it may be possible to have any rulings against that person stayed until he or she is able to show up in court to deal with claims from creditors.

Source: US Courts – Federal Courts, “Bankruptcy Basics – Process“, US Courts – Federal Courts, June 24, 2014