How Does Bankruptcy Work?
by: Stuart Simpson
Bankruptcy is a 3-step process:

1. You must first file in federal or state court saying you are “insolvent” – meaning you have no cash or assets (things you can sell) to pay your bills.

2. You have to arrange a repayment plan with creditors and the court.

3. You “discharge” – meaning settle your debts with creditors for usually a lower amount than the original bill. This gives the creditors some of their money back.

Pros and Cons:

Pros:
Legal protection from creditors Takes care of most of your debt You may get to keep your home May stop financial ruin Enables a fresh start

Cons:
Bad Credit Still have to pay some debt Have to go to court May loose your assets Loss of privacy (usually they print your bankruptcy in the paper)