How To File Bankruptcy

Bankruptcy is the last option that any business person wants to take. This proceeding can easily put a huge mark on your credit score and profoundly destroy your reputation. However, at times filing for a bankruptcy proceeding will be the only approach to get out of  a difficult financial situation. The following paragraphs will highlight some steps on how to file bankruptcy.

Ensure that this the only available solution

Bankruptcy will allow you to get a brand new start. According to the Bankruptcy Abuse Prevention and Consumer Protection Act which extensively changed the U.S. Bankruptcy Code in October of 2005, before filing for bankruptcy an individual needs to get consumer credit counseling from one of the entities authorized by the US Trustee 180 days after filing for the proceeding. This kind of counseling is supposed to provide this individual with other options.

Think about the different types of bankruptcy

Chapter 7 is the most popular, which is really a straight or a liquidation bankruptcy and the other one is chapter 13, which is actually a repayment plan. BAPCPA makes the filing for chapter 7 a lot more difficult, so most people are forced to opt for chapter 13.

Do your research to know about the filing procedure

Some individuals decide to file with no assistance from a lawyer, but it is best to hire one. You can research to find one of the qualified lawyers with experience in this area. Quite often, individuals who decide on large firms will work together with a paralegal rather than the lawyer. You should opt for an attorney that will give you the opportunity to speak with him or her directly. The lawyer you decide on will tell you which chapter would be best after reviewing your finances, plus he or she will also help you to complete the BAPCPA’s test.

Know about the fees beforehand

The fees to file bankruptcy will vary. Some attorneys will charge a set amount, whilst others charge based on the amount of financial debt you have. Some lawyers will need you to pay in advance to filing. After you hire an attorney, you should refer all your creditors to this person.

Wait to have a meeting with creditors

As soon as your attorney has submitted the petition, you’ll be notified by mail about the meeting with creditors. This will enable the trustee to make sure that you have presented truthful answers about your bankruptcy case and also that you fully understood and consented to your bankruptcy filing.
Your attorney would have met up with you before this meeting in order to review all your financial debt to make sure that everything is detailed. It is also important to list all your assets. Your attorney will also discuss sample questions to prepare you for the meeting. Before the meeting your lawyer would have reviewed all the information in your file because you have to answer honestly in the meeting.

Avoid using credit cards when filing for bankruptcy

When you use credit cards and while planning to file bankruptcy, a creditor could challenge the debt discharge or perhaps your right to discharge any kind of debt. In case you received the debt recognizing that you were unable to pay it back, you might not be eligible to get a discharge if the creditor is challenging it with a lawsuit or even an adversary proceeding within the bankruptcy case.

Chapter 7 case

For chapter 7 proceedings, the trustee is going to ascertain whether or not you have assets that could be liquidated and utilized to pay back your creditors. In case the trustee decides that your assets are exempted, a report for no distribution can be filed in the bankruptcy court. In case the trustee decides that you have non-exempt assets, these can be sold and repayments might be made to creditors. With a chapter 7 court case, it is possible that you might not have to repay the creditors anything at all.

Chapter 13 case

With Chapter 13, you’ll be instructed to sign a three to five year repayment plan in order to pay creditors the highest amount that you can afford to pay as time passes, taking into consideration the means test from the BAPCPA.

After creditors meeting

On the 60th day following your meeting with creditors, this will be the first date set for the deadline when creditors can file lawsuits if they want to challenge a partial or a complete debt discharge. If this lawsuit is not filed, right after this day you can get notification for the discharge of your financial debt in case you file a chapter 7 bankruptcy. Debt discharge implies that you would have no obligation to pay back this discharged debt, but the existence of this discharged debt might still show up on your credit reports and also signifies that none of your creditors is able to collect this unpaid debt.

If you had filed for a chapter 13 case, a notice for discharge will be sent to you about 30 – 60 days following your final payments. In addition, your trustee has to confirm that the payment plan was followed and finalized.

It is very important when considering bankruptcy that you are fully aware and informed of exactly how to file bankruptcy so that you can take the best option for your circumstances.