File Chapter 13 Bankruptcy is basically a Federal Debt Consolidation Plan

Exactly what is bankruptcy or bankruptcy due to medical bills? Bankruptcy is a set of laws designed to protect the consumer that, through a federal legal process allows a consumer’s debts to be forgiven or partially paid back in a managed way. The federal bankruptcy law recognizes that bad things can sometimes happen to any American, regardless of their income, often through no fault of their own (i.e. medical emergencies or job loss), and American consumers sometimes just don’t have the means to satisfy a lender or creditor's repayment demands.

Once a consumer files for bankruptcy via their own personal bankruptcy , a mandatory automatic Stay is put into effect, which legally forces all creditors to stop trying to collect debts from you. The Stay instantly forces creditors and collection agencies to stop calling to harass you, stops collection letters from being sent to you, and also stops any current or pending bank levies, lawsuits, wage garnishments and other types of creditor harassment.

Chapter 7 Bankruptcy and Chapter 13 Bankruptcy are the two most common ways for the consumer to file for bankruptcy protection; Chapter 7 bankruptcy is by far the most popular. It allows consumers who own little or no assets to completely discharge their debts through a relatively quick chapter 7 bankruptcy process managed by the consumer’s personal bankruptcy attorney.

Chapter 13 bankruptcy is basically a federal debt consolidation plan. Through the use of a personal bankruptcy lawyer, Chapter 13 bankruptcy allows the consumer to keep their house and cars and to repay a portion of their debt over several years after which the bankruptcy will be discharged.

The bankruptcy court will send the consumer a Discharge notice as soon as the Chapter 7 Bankruptcy or Chapter 13 Bankruptcy has been effectively completed. The Discharge is the consumer’s legal release from all of the debts contained in the bankruptcy. Any banks, creditors, or collection agencies that were contained in the Chapter 7 Bankruptcy or Filing Chapter 13 Bankruptcy have no legal cause to contact you or attempt to collect the debts as the debts have been legally discharged.