Pre-Bankruptcy Credit Counseling

• Before receiving consideration for a Chapter 7 or 13 bankruptcy filing, individuals must obtain credit counseling (either a group or individual counseling session) from an approved agency within 180 days of filing the bankruptcy petition.
  
  

Chapter 7 Bankruptcy

• Chapter 7 bankruptcy, liquidation, places assets in the hands of the bankruptcy court. Liquidated assets must be distributed to creditors. In most cases, an individual's debts receive complete discharge. Some outstanding debts, such as student loans, may not be discharged in bankruptcy. Previously placed liens on property remain even after a bankruptcy proceeding.
  
  Bankruptcy begins with a petition of the debtor to the bankruptcy court. The debtor must present assets, income and expenses, and a consolidated financial statement.
  
  

Chapter 13 Bankruptcy

• Chapter 13, a wage earner's plan, allows an individual with regular income to repay existing debts under a reorganized plan. If the individual earns less than the state median income, Chapter 13 remains in effect for three years. If the individual earns more than the median wage, the plan remains in effect for at least five years.