Bankruptcy is considered to be a drastic measure and should only be considered when you reach the point where there is no other choice. The damage bankruptcy causes can impact your financial reputation and credit score for years to come. Still there is a way to file; learn how to file bankruptcy papers credit counseling and other necessary steps for a successful filing.
Filing for bankruptcy is not just getting bankruptcy papers and sending them to the appropriate department. There are many chapters of bankruptcy and it’s vital that you fill out the right papers. Chapter 7 bankruptcy is the most common. It is a straight liquidation that exchanges a discharge (clearance that the bankruptcy filing was successful) for selling your most valuable belongings to make cash to hand over to creditors. If you do not have enough to sell you will have to meet the monthly payments. Another common chapter is chapter 13. Set up a repayment plan that will make sure your creditors get their money back between three and five years. Other chapters available are chapter 9 (government offices and municipals) chapter 11 (for individuals and businesses that don’t quality for chapter 13) and chapter 12 (farmers and fisherman). It is best to talk to a bankruptcy lawyer or trustee to see which chapter suits your situation best.
During the filing process the bankruptcy code requires all bankruptcy individuals to undergo credit counseling. There will be an appointed trustee (or you can hire a bankruptcy lawyer) to help you with your bankruptcy filing and that person will recommend this step along with the exact company or person to go to. All individuals must go to credit counseling within 180 days of fling papers. The credit counseling representative will tell you bankruptcy case filing alternatives. The credit counseling session is also about filling out a BAPCPA means test. It will tell you which chapter makes you the most eligible to file.
Grab the appropriate papers and fill it out. Be honest about everything. List all properties that you own and all the creditors that you owe even the ones you are unsure about listing. There are consequences when you do not include everything in the bankruptcy application. The trustee or lawyer will file a petition for bankruptcy. When the papers are on file you will receive a court date hearing notification called a ’341 meeting’ or a ‘meeting of creditors.’ This will ensure that everything you listed was accurate and honest; this is where lies and secrets are exposed. The trustee and/or lawyer will be there with you at the meeting with the listed creditors to go over everything on the filed papers. Make sure the lawyer or trustee prep you for this important meeting. The meeting will last ten minutes and will be recorded. This is evidence for the court because you are being sworn in.
Once the bankruptcy papers are approved the case will be over with four to six months after it–assuming there are no hiccups along the way. Debts will be resolved or a payment plan will be set up depending on the chapter filed. Resolutions should take days or weeks while payment plans will take years before getting the coveted discharge.
It is a good idea not to have more debt on top of the debt you owe. Stop using credit cards altogether until the bankruptcy process is over. Using credit cards during the bankruptcy process counts as debt and that accumulated debt will have to be included in the papers. That is impossible to do if you keep using your credit card. Creditors also cannot harass you during the bankruptcy process.
Some good information can be found here.