BANKRUPTCY is your weapon to take back your financial future. While most your debts were created under State Law, Bankruptcy is a Federal Law, and so it controls over all those State rules. If you follow the procedures and rules in Bankruptcy, you can take back control of your money and not have to worry about those past debts. This applies to most debts, but TAXES and STUDENT LOANS, as well as a few others will require special treatment.
First, as soon as you file, collection efforts must stop. Once your case is filed, there is an automatic court order (called a STAY) stopping all harassment and collection efforts, even GARNISHMENT. This means creditors cannot even call you, and you don’t have to deal with them in any way.
SECURED CREDITORS must be paid in any case, because they have a right attached to their security. So, if something is mortgaged, be sure that you keep up payments as well as you can, at least until you get legal advice. In Chapter 13, you may be able to limit payments if the security is worth less than you owe.
G. Paul Marx, A Professional Law Corporation
THE DEAL THE TRUSTEE EXEMPT PROPERTY