Bankruptcy How To File: A Step By Step Guide
Filing for bankruptcy describes a legal or administrative process whereby an individual who cannot pay back his debts declares his financial status. After filling the necessary paperwork a court judge and a trustee will thoroughly examine the liabilities and assets of the individual to confirm if truly they cannot pay their debts. If they are truly found to be unable to pay the debt, the debt is discharged, giving the individual a chance to start afresh on a fresh slate.
It is only expected that in a capitalist economy individuals and businesses will fail from time to time, either as a product of bad decision or just ill-luck. Bankruptcy laws help to give such individuals and businesses a second chance.
While filling for bankruptcy petitioners do not have to appear in court, rather they deal mostly with the trustee, who is responsible for handling and overseeing the bankruptcy issue. There are two most common types of bankruptcy; Chapter 7 and Chapter 13.
When a petitioner files a Chapter 7 bankruptcy, all debts are basically discharged, but the petitioner may be required to liquidate some of his/her assets in order to pay off some of the debt. To be eligible for Chapter 7 bankruptcy petitioner must pass the means test. This test is to exclude individuals who have a high income or substantial asset from filing for this type of bankruptcy.
Chapter 13 bankruptcy describes a scenario where the debts are restructured and a payment plan is created. The petitioner will be required to make a monthly settlement to clear off as much debt as possible.
Knowing how to file for bankruptcy improves your chances of getting your petition approved. Bankruptcy - How To File;
1) Get your information:
The first step towards filling for a successful bankruptcy petition is to put together all of your financial information. You will need it to be as detailed as possible. You will need to present your debt profile; who you owe, how much do you owe, how much have you paid back etc.? You will also need to present details of your income; what you get from your regular paying job, your income from a part-time job, dividend from investment etc. Your asset and property are not left out as you will need to declare all asset and property.
2) Credit Counseling:
Six months before you put in a petition for bankruptcy you must undergo credit counseling from an approved agency. This counseling takes only about an hour or two each day and can be done over the phone or internet. The credit counseling agency will assist in all things related to your finance. They will help by describing what type of bankruptcy to apply for and in the case where the petitioner chooses Chapter 13 bankruptcy, the agency can assist with the payment plan.
3) Creditor's meeting:
The next step in how to file for bankruptcy is the creditors meeting. This refers to a meeting between your creditors and you. It is also called a 341 meeting. The aim of the meeting is for your creditors to question you and review your payment plans. After the filing the bankruptcy petition, an automatic stay prohibits any creditor from trying to make collections from the petitioner.
The creditors can either object to the proceedings or do nothing. If an objection is raised it must be addressed before the proceeding can go on. If there are no objections then your payment plan will be approved by the judge and you can begin paying on a bi-weekly or monthly basis to the trustee, who will help pay the creditors.
4) Post-Bankruptcy Credit Counseling:
The final step in how to file for bankruptcy is the undergoing of a post-bankruptcy credit counseling. This is done either after the creditors meeting or when you are about to make your last payment. Without this counseling, you will not be able to have your debts discharged and complete the bankruptcy process.
Bankruptcy How To File
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