There are a lot to consider on how to file bankruptcy but, first, you have to consider if this debt relief option is right for you and whether you are willing to accept its consequences. But if you have decided that bankruptcy is your only way out of your debt load the following bankruptcy advice can shed light on.
Before you file a bankruptcy case, you are required by the new law to have a one-on-one session with a government-approved credit counselor who will help you find other options besides filing bankruptcy. This is to decide whether bankruptcy is necessary. If you must go ahead, here are some things to know before you learn about how to file bankruptcy.
Chapter 7 and Chapter 13 Bankruptcy
Bankruptcy is a legal proceeding that clears certain debt of a debtor who can no longer pay off their debts. The debtor obtains debt relief through judicially supervised reorganizations or liquidation of his or her assets for the benefit of creditors. For individuals, the two types of bankruptcy are chapter 7 and chapter 13.
Which chapter suits your financial situation? You need to find out the specific conditions and requirements of each chapter. For example, the new bankruptcy law you will need to take a means test, if you are seeking to file under chapter 7. And to be eligible to file Chapter 13 you should have a regular source of income.
The cost of filing a chapter 7 or chapter 13 bankruptcy petitions is about $200. And the fees of a bankruptcy lawyer may range from $600 to $1200 depending on the type of bankruptcy. For further information, consider retaining a lawyer who can give assistance and knowledge on how to file personal bankruptcy.
Steps on How to File Bankruptcy
Filing bankruptcy could be a complicated and stressful process, but with proper treatment of the issue and scenario, it could be made easier. Here are bankruptcy filing steps that are easy to follow.
1. Gathering paperwork. Use official bankruptcy forms to file a petition for bankruptcy. It’s essential to give detailed information about your current income sources, monthly living expenses, all assets and liabilities. Be sure to include in the listing all your existing debts, both secured and unsecured.
2. Filing bankruptcy. Either your or your counsel will need to file a petition and several other forms at a bankruptcy district court. Your case will then be assigned to a court appointed trustee. The trustee will look over the documents and challenge any element of the bankruptcy case. They also make sure that creditors are paid as much as possible.
3. Automatic stay. Once the courts trustee notifies creditors about your bankruptcy, an automatic stay immediately goes into effect. This provision prevents any creditor from making any action against you to collect a debt, or staking a claim on any of your property. In addition, this will stop any foreclosure proceedings.
4. Meeting of creditors. After you or your lawyer has filed your petition, you will meet with the trustee and your creditors in the 341 Meeting of the Creditors. This is the place to discuss and settle everything.
5. Plan of confirmation. The last step is to attend a confirmation hearing held by the bankruptcy judge. This is when the judge must decide whether the plan of confirmation is possible. If so, they will discharge your debt with Chapter 7 bankruptcy filing or will approve a payment plan with a Chapter 13 bankruptcy filing.
These are the steps on how to file bankruptcy. Before you file bankruptcy make sure to weigh its pros and the cons. One of the cons is a record of bankruptcy will stay on your credit report for ten years, affecting your financial credibility for long time. If you are willing to accept the negative consequences, however, it’s wise to hire a reputable bankruptcy attorney familiar with personal bankruptcy filings.