The word "bankruptcy" is often misused.  It has the common meaning of something wrong or immoral.  That is not true.  Bankruptcy is a very moral law that puts you on an even footing with people who have gotten you into debt by lending you money at interest.  It does not give you any unfair advantage. No one plans to get into debt so that they can do a bankruptcy.  Bankruptcy is simply a safety valve, so that people who cannot pay their debt without hardship have a way out.

If there were no bankruptcy laws, you would have to live with your debt forever.  In most countries, that is what happens.  The custom in Ethiopia is to chain the creditor and the borrower together, and let them work it out. I guess the idea is that they got each other into it, and it is up to them to get each other out of the situation!  A client from Chile came into my office, and told me that in Chile, if you owe someone money, the rich person you owe simply gets the police or the military to come to your house and rob you of everything, or perhaps murder you.  In the United States, it does not work like that.  We have the best laws in the world. 

Bankruptcy gets rid of bills. It is like a divorce from your credit cards.  It is that simple.  You can either discharge your debt immediately under Chapter 7 of the Federal Bankruptcy Code, or you can reorganize your debt, and pay it in lower installments over as long as 60 months, under Chapter 13 of the Code.  These two "Chapters" are the ones that refer to individuals.  Other "Chapters" are for corporations, farmers and railroads.  Since I only represent individuals, the other Chapters are not dealt with in this book.

Bankruptcy is not the end.  It is the beginning.  A "Discharge" is issued after a judge has examined your situation.  This means that all debts, which are not "exceptions" from discharge, are gone.  Who pays them?  No one.  When most creditors lend money, they figure their rate of interest high enough so that any losses from bankruptcy are covered.  By the way, only part of creditors' losses are for bankruptcy.  The big lenders lose far more to fraud, to theft, and to people who never have enough integrity to deal with the situation honestly, and just disappear or hide from the creditors.

Bankruptcy is only for honest people.  If you are a crook, if you are "working under the table", or if you are hiding assets, or don't want to tell the truth, do not go anywhere near a bankruptcy lawyer.  I will not take your case.  I deal only with honest people who have too much debt to repay.  The bankruptcy laws were not written for tax evaders and con artists.  There are very severe penalties for lying on your bankruptcy petition, a copy of your bankruptcy goes to the IRS automatically, and debts incurred by fraud or deception are not dischargeable.

So, contrary to what you might have been told by your bartender, or by someone who knows nothing about it, bankruptcy is an honest law for honest people, passed by the United States Congress to give honest people a way out of debt.