How to Claim Bankruptcy
Filing for bankruptcy is usually a last resort for those with severe financial trouble. Before filing, it is highly advisable to get a lawyer. Bankruptcy law is vast and complex, and having a lawyer who specializes in these proceedings is invaluable. Some lawyers offer free bankruptcy evaluations, so that an individual may decide if he or she wishes to proceed before making a financial commitment.
Under the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, an individual must undergo an approved credit counseling program within 180 days of filing for insolvency. The counseling is intended to make individuals aware of other options, as bankruptcy is intended to be a last resort.
Finding a lawyer who meets your needs is crucial. It is best to find one that charges a flat fee, often based on the amount of debt you owe. The reasons for hiring a lawyer are twofold: first, to make sure you take the best course of legal action, and second, because once a lawyer files your bankruptcy, creditors must then deal with the lawyer rather than you directly.
There are many types, or "chapters," of bankruptcy. The most common chapters for individuals to file are Chapter 7 and Chapter 13. Although Chapter 7 is usually the preferred method, it is now subject to means testing, where officials make sure that the debtor genuinely cannot repay debt. Means testing can force filers to go with Chapter 13.
Chapter 7 bankruptcy involves the liquidation of assets. First, you total up the value of your personal belongings, including homes and cars. After you file bankruptcy forms, you are issued an "automatic stay" from creditors, preventing them from contacting you for money. Once creditors have determined that you cannot make payments, a trustee is appointed to oversee the liquidation of assets.
If the sale does not make enough money to pay off debt, the remainder of the debt is discharged. After creditors receive a discharge notice, personal liability for the debts does not exist.
Chapter 13 bankruptcy results in a payment plan, and you keep personal assets. After filing, as in Chapter 7, you receive an "automatic stay" for creditors. Federal tax returns from the past four years are required for the trustee, as well as creditors.
Within 15 days of petitioning, you must submit a repayment plan, with the first payment due after 30 days. The creditors and debtor meet to discuss the repayment plan and make sure it is realistic, and if it is approved by the trustee, the plan goes into effect.
While under the repayment plan, the debtor is required to file income and expense reports each year. After payment is complete, a discharge hearing eliminates outstanding debt.
Under the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, an individual must undergo an approved credit counseling program within 180 days of filing for insolvency. The counseling is intended to make individuals aware of other options, as bankruptcy is intended to be a last resort.
Finding a lawyer who meets your needs is crucial. It is best to find one that charges a flat fee, often based on the amount of debt you owe. The reasons for hiring a lawyer are twofold: first, to make sure you take the best course of legal action, and second, because once a lawyer files your bankruptcy, creditors must then deal with the lawyer rather than you directly.
There are many types, or "chapters," of bankruptcy. The most common chapters for individuals to file are Chapter 7 and Chapter 13. Although Chapter 7 is usually the preferred method, it is now subject to means testing, where officials make sure that the debtor genuinely cannot repay debt. Means testing can force filers to go with Chapter 13.
Chapter 7 bankruptcy involves the liquidation of assets. First, you total up the value of your personal belongings, including homes and cars. After you file bankruptcy forms, you are issued an "automatic stay" from creditors, preventing them from contacting you for money. Once creditors have determined that you cannot make payments, a trustee is appointed to oversee the liquidation of assets.
If the sale does not make enough money to pay off debt, the remainder of the debt is discharged. After creditors receive a discharge notice, personal liability for the debts does not exist.
Chapter 13 bankruptcy results in a payment plan, and you keep personal assets. After filing, as in Chapter 7, you receive an "automatic stay" for creditors. Federal tax returns from the past four years are required for the trustee, as well as creditors.
Within 15 days of petitioning, you must submit a repayment plan, with the first payment due after 30 days. The creditors and debtor meet to discuss the repayment plan and make sure it is realistic, and if it is approved by the trustee, the plan goes into effect.
While under the repayment plan, the debtor is required to file income and expense reports each year. After payment is complete, a discharge hearing eliminates outstanding debt.
