How Bankruptcy Works

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Bankruptcy has been called "The Ultimate Weapon", because it's the only legal way to stop creditors, remove your liability to repay many of your debts and allow you to walk away with a clean slate.

First of all, when you file for bankruptcy, you're granted protection from creditors by something called the automatic stay. This feature of bankruptcy halts ("stays") all collection efforts by your creditors, including garnishments, collection letters, lawsuits and even foreclosure proceedings. During your bankruptcy case, creditors are out of luck until your case has been resolved.

When your bankruptcy case is completed, much of your debts are "discharged". The bankruptcy discharge is the actual process that removes your legal liability to repay your debt. Debts that are discharged are permanent eliminated, and the creditor owning that debt no longer has any rights to get it back.

See the articles and topic below to get informed on how bankruptcy works.