For many people who are completely over their head in debt, filing for bankruptcy can provide relief.Most people in the United States can file for Chapter 7 or 13 bankruptcy.Chapter 7 in which a court settles most of the debts involved is discussed in this article.The process is easy to navigate with proper legal advice or research.
Step 1: Determine if it is the best option for you.
If you cannot repay your debts and do not anticipate any changes, you should consider filing for bankruptcy.You don't have to be broke to file.You should talk to an attorney before raiding your retirement funds.The decision to file for bankruptcy is a last resort and comes at a high cost.If enough of your debts are discharged, the process will be worthwhile.People who accumulate high medical bills or debt from credit cards, personal loans or auto accidents are more likely to file for bankruptcy.Chapter 7 bankruptcy allows the discharge of these debts.Chapter 7 will allow the court to seize your assets to meet the demands of your creditor.You can keep your home, retirement funds, public benefits, professional tools, and certain personal possessions.Sports cars, large-screen televisions, and high-end jewelry are not essential items, so be prepared to let them go.Property exempt from seizure can vary by state, so be sure to check your state's laws before you file.
Step 2: Do you qualify for Chapter 7?
Depending on your income, this will be different than other families of similar size.The court checks to see if you have enough income to pay your debts.Chapter 13 "debt consolidation" is the only option if you fail to qualify.The Chapter 7 bankruptcy process does not discharge certain debts.These include debt incurred in bad faith as a result of fraudulent or grossly negligent, pre-petition actions as well as certain tax and student-loan debt.Check to see if your debts are covered under Chapter 7.
Step 3: Should I hire a bankruptcy attorney?
A person can help you decide whether Chapter 7 is the best option for you.The cost to hire an attorney for this process is $1,200.The complexity of your case will affect the price.Attorneys expect their fee to be paid quickly.Outstanding legal fees can be discharged in this case.It is much cheaper to file without a lawyer.A good lawyer can help you get the court to settle more of your debts or protect your personal property from seizure.You are still required to pay the Chapter 7 filing fee, as well as the cost of pre-filing credit counseling and a personal-finance-management class, each of which can cost up to $50, even if you don't have a lawyer.How to file Chapter 7 bankruptcy without a lawyer is a good place to start.
Step 4: Credit counseling must be completed.
Credit counseling is required by the federal government for people to file for bankruptcy.If you can't pay, the fee will be free.If your case is not filed with credit counseling, it will be dismissed.There is a list of approved counselors on the Justice.gov website.
Step 5: The required paperwork needs to be completed.
Along with the petition itself, you will file supporting documents, which include a schedule of assets and liabilities, a list of current income and expenditures, and an accounting of executory contracts and unexpired leases.You can get the forms online for free.The list of accounts, addresses, and amounts owed should be complete in order to avoid problems after the bankruptcy.People who are not notified by the court will try to collect.Even when a loan is in good shape, debt should include co-signed liabilities and outstanding guarantees.Otherwise, they can seek payment.
Step 6: The petition, completed paperwork, and credit-counseling certificate must be filed with the bankruptcy court.
You have to file a petition with the court where you live in order to be a debtor.Most legal actions are stayed once the petition is filed, which means that most of your creditor will not be able to start or continue lawsuits.You will have to pay $335 by cash or money order if you didn't apply for a fee waiver.When you file your initial petition, the filing fee must be paid in full, although some courts allow you to pay in installments.
Step 7: Provide a copy of your most recent paycheck and tax return to your bankruptcy Trustee.
You have to give these documents to the Trustee at least seven days before the meeting.You should check with your lawyer or appointed Trustee to clarify what documents the Trustee needs.After you file your initial documents, you will be assigned to the bankruptcy Trustee.The Trustee is not your lawyer or the judge, but an official appointed by the court or your creditor to make sure the process runs smoothly.
Step 8: Attend the meeting of the creditor.
At least 21 but no more than 40 days after the petition is signed, a meeting will be held.This is also called a meeting.The people who owe you money will be able to ask you questions about your property and finances.Most of your debt is not backed by a home or car, so this rarely happens.Representatives from credit card companies won't attend the meeting.People who owe money for your house or car may be present.The meeting will be overseen by your Chapter 7 Trustee.He or she will tell you what to bring to the meeting, but you will usually need the following documents.
Step 9: You need to complete the post-filing, personal-financial-management course.
Only after your case is filed can you complete this course.You did not take the credit-counseling course when you submitted your paperwork.The course can cost as little as $50.The links to the approved providers are on the justice.gov website.You could have your case dismissed if you don't do this.The correspondence tells you to submit the certificate of completion.
Step 10: It is necessary to file motions or objections.
You may be able to dispute some of the claims made against you.A car-loan creditor may claim more than your documents show.Proper legal procedures will have to be used to resolve this.It is advisable to seek professional legal advice again.You will only be allowed to make such motions when your case is open.Don't wait until after it closes.
Step 11: Wait for the last letter saying your debts have been discharged.
After all objections and motions are resolved, your case will be processed and you will receive notice of your successful bankruptcy filing.61 days will be the minimum after the meeting of your debts.
Step 12: You have to get yourself back on track.
You are discharged at the end of the bankruptcy process.You can no longer be held responsible for debts that have been discharged.You're ready to rebuild your credit.Some debts may be "reinstated" as a result of creditor pressure.If a debt is reinstated, it is not discharged but continues under the same terms as before the proceedings.