, to provide relief to debtors who have debts that they are unable to pay, generally because current debt exceeds current income.
Upon filing of a Petition for Bankruptcy a restraining order is entered to stop creditors from pursuing the collection of the debt. The restraining order is called a stay. This stay order remains in effect until lifted by the Court.
There are four options available under the Bankruptcy Code.
Chapter 7 is the most common type of bankruptcy. Upon discharge all dischargeable debts under the Bankruptcy Code will be uncollectable, except those debts the debtor has specifically agreed to pay.
Chapter 11 is the type of bankruptcy typically for businesses where the debt is at least $1.5 million.
Chapter 12 is the type of bankruptcy typically for businesses where at least one-half of all income must come from farming.
Chapter 13 is like a debt consolidation loan where you make One monthly payment to the trustee who pays your bills for you.