Bankruptcy is a drastic way to protect yourself against creditors. For some people, filing for bankruptcy is a hard pill to swallow when they consider themselves to be responsible and efficient individuals. You should remember though that bankruptcy is designed to give you a fresh start in life so don’t hesitate to take advantage of it when no other recourse is available. Here is the basic process of bankruptcy filings:
1. You need to determine if there is any other option available to you. Bankruptcy will remain on your file for ten years so it can have a large impact on your ability to take out loans in the future. Prior to the filing, you also need to go to consumer credit counseling by an establishment approved by the United States Trustee.
2. Consider the two most popular bankruptcy types: Chapter 7 and Chapter 13. A lot of people prefer Chapter 7 but it is difficult to file for it because of the means test. Instead, they are forced to file for Chapter 13.
3. It is recommended for you to hire a bankruptcy lawyer because they can aid you in the process. The lawyer can also help determine which chapter is best for your needs based on your financial health. Also, find out how much their services cost because lawyer’s fees vary.
4. Refer your creditors to the bankruptcy lawyer. Once your lawyer is retained, you should refer them to the lawyer’s office. And once the lawyer files your case, no creditor should contact you about your debt anymore.
5. Go to the meeting of creditors. When your petition is submitted, you need to wait for the meeting of creditors. You will be notified through mail when this event will occur. This meeting lets the trustee ensure that you have truthful answers and that you understand what filing for bankruptcy will entail.
6. If you file for the Chapter 7, the trustee will see whether your assets can be used to pay your creditors. You may never have to pay back the creditor in this case. On the other hand, you are required to go into a three to five year repayment plan in the Chapter 13 bankruptcy case.
7. The 60th day after the meeting of creditors is the deadline for creditors to challenge any discharge or file lawsuits against you. If no lawsuits are filed, you will receive the notification of debt discharge under Chapter 7.
