Bankruptcy can be really dangerous and embarrassing but sometimes it is inevitable. Bankruptcy comes about only through hectic living practices. Luxurious life is what we all wish but it should not be at the hazard of knocking against bankruptcy. A time comes when we acknowledge that we are unable to pay our debts that have mounted more than our income. This is where bankruptcy sneaks in. Regardless of how careful and steadfast you are, there are chances of getting bankrupt.
Bankruptcy is of two types, one is a straight or insolvency bankruptcy and the other is a repayment plan for individuals. You need the assistance and counseling of a learned and renowned lawyer who will be in a situation to obtain the bankruptcy for you. You will have to pay for this process, but there are some places that do it free of cost.
Though bankruptcy gives you anew start there also are many hitches and hurdles to be crossed when filing for bankruptcy. No one would like to file for bankruptcy unless their credit is really in bad shape.
There are a lot of tips on how to file bankruptcy. Firstly you should remember that student loans and tax bills are not recorded under bankruptcy, they have to be paid by you. But at the same time, if you file for bankruptcy you have some time to relax since your creditors have no right to disturb you for payments. It is against the law.
You understand the consequences of filing bankruptcy and have decided that bankruptcy makes the most sense for your future. So now you should learn how to file bankruptcy.
Consider Hiring an Attorney
Many people choose to hire a bankruptcy attorney before formally filing for bankruptcy. In most cases, this is an important measure because an attorney can often produce more positive outcomes than you could attain on your own. An attorney is especially important if you are filing for Chapter 13 bankruptcy where a plan will need to be carried off with your creditors. First you meet with the lawyer and highlight him on your creditors. He will then submit your petition to the creditors and you will get a mail notifying the date of the meeting with the creditors.
Get Consumer Credit Counseling
Also, it is important to look for consumer credit counseling from an entity authorized by the U.S. Trustee prior to filing for bankruptcy. Federal bankruptcy law demands bankruptcy petitioners to have consumer credit counseling from an approved entity within 180 days of filing a bankruptcy petition. The consumer credit counseling will reexamine options to bankruptcy and aftermaths of bankruptcy with you.
Consumer credit counseling agencies work on your behalf to cut down late charges, interest rates, over limit fees, and lower your monthly payments. They work to combine your monthly payments together, which are paid to the counseling agency, and payments are then made on your behalf to your creditors. Consumer credit counseling agencies are organized to get you back on your feet and financially stable as quickly as possible.
Before you begin your consumer credit counseling search, you need to have an precise list of all your debts. The best way to know exactly how much you owe and to whom, is to obtain an latest copy of your credit report from all 3 credit reporting agencies so that you are girded with the most accurate information. This will give you a complete list of every debt you have and make filling out your consumer credit counseling paperwork a piece of cake.
Decide Whether You are Filing for Chapter 7 or Chapter 13 Protection
When you are ready to begin bankruptcy proceedings, you, in consultation with your attorney if you have hired one, will need to decide if you are filing for Chapter 7 or Chapter 13 bankruptcy protection. Chapter 13 bankruptcies establish a repayment plan with your creditors and Chapter 7 bankruptcies allow you to pay back your debts through a settlement of your assets.
After you have resolved which Chapter of the Bankruptcy Code best conforms to your financial needs and long term goals, then you can file the necessary papers with the Bankruptcy Court. You should also be geared up to pay all relevant filing fees at this time.
Once you have formally filed your petition for bankruptcy with the court, all of creditors will be apprized and an automatic stay comes in effect. This implies that your creditors may not reach you regarding debt repayment. Rather, all discussions of satisfying existing debts will go through the court.
You will be notified, either through your attorney or by mail, of the date for a meeting with all of your creditors. This meeting will assure that you have presented factual information on your credits. Prior to the meeting your lawyer should make you to answer simple questions based on your credit. While the meeting with the creditors is on, you will be inquired similar questions. The meeting is normally not long but it is important. The meeting will reexamine the debts and assets recorded in your bankruptcy proceeding to ascertain that all of your proclamations were honest. The trustee running the meeting will also make sure that you infer the details and outcomes of your bankruptcy petition.
Developing a Plan
The next step is to formulate a plan to finalize your debts. In a Chapter 7 case, the trustee will check if you have any taxable assets that can be sold to satisfy your debts and will supervise the sale and distribution of funds from those assets. In a Chapter 13 case, you will enter a 3-5 year plan to repay your debts.
Sixty days after filing for bankruptcy the creditors will have an opportunity to testify that you have the potentiality to pay your debts. But at the same time if no suits are charged against you after the 60th day, then you will get a notice remarking that you have no additional responsibility to repay the debt. If a lawsuit is lodged then your lawyer will work with you to settle an agreement with the creditor or creditors who have brought suit.
It is a critical decision whether or not you should lodge for bankruptcy. If you decide that bankruptcy is the right plan for you then a lawyer and the US Bankruptcy Court can help you navigate the different requirements necessary for a successful bankruptcy discharge. So knowing how to file bankruptcy is not all, staying out of bankruptcy is the most important way of life. Live a modest life, pay your debts. Remember, your creditors too face much trouble when you file for bankruptcy.