Filing Bankruptcy

How to File and What to Know

Life is expensive. Food, clothing, housing, supporting a family – it all adds up FAST! That’s why so many of us find ourselves in debt and at bankruptcy’s door. There are ways to fight your debt like through debt consolidation and credit counseling but sometimes those methods just aren’t enough.

If you’ve found yourself sliding towards bankruptcy, you need to know what you’re in store for and what types of bankruptcy there are.

There are two types of bankruptcy you can file:

Chapter 7 – liquidating all non-exempt property to pay off creditors

Chapter 13 – requesting the opportunity to repay some or all debts in better terms (i.e. debtor has an income but just can’t keep up with the payments)

There are other types of bankruptcy (types-off-bankruptcy) but regarding personal bankruptcy, Chapter 7 and Chapter 13 are your options.

How to File for Bankruptcy
Determine a Chapter to File: If you’ve decided your only option is to file for bankruptcy, you need to first figure out which type you’re going to file. Bankruptcy is a legal proceeding that must be filed in bankruptcy court, so it’s a good idea to consult a legal professional for advice on which chapter to file. Typically if you have no way to pay any amount of your debt, Chapter 7 is your best bet. If you have some income and just can’t seem to meet the payments, Chapter 13 is a better option. Ultimately, if you want your bankruptcy to go as smoothly as possible, you need to get

a bankruptcy lawyer. So, the next step is to…..

Get a Bankruptcy Lawyer: Again, bankruptcy is a legal process and involves extensive paperwork, filing, and other proceedings. Trying to file bankruptcy on your own is possible, but one slip up can delay your bankruptcy and cause further problems.

NOTE: Before you can file, you need to enroll in and complete an educational course through an approved counseling agency. This is a new mandate for those filing bankruptcy. Your lawyer can help you find an approved course.

After you’ve completed your course, your lawyer will ask you for all personal information necessary to file bankruptcy, so be ready to give your lawyer all the information he/she needs. Once your bankruptcy has been filed, you’ll be assigned a trustee. This trustee is responsible for your case and acquiring all the necessary documentation and details. In the meantime, you need to notify your creditors that you’ve filed for bankruptcy. This will place an immediate halt on all legal actions they may be taking to obtain the amount you owe them from the day your bankruptcy is filed.

Meet with Your Creditors: Part of the bankruptcy process is for you and your lawyer to meet with your creditors and their lawyers. This meeting is typically 30 days after your first file and held by your trustee. During this meeting you will be sworn in under oath and all discussions during the meeting will be recorded. The purpose of the meeting is to discuss the bankruptcy papers filed on your behalf. This meeting doesn’t normally take too long and creditors are not necessary required to appear.

After this meeting, your assets are liquidated and your creditors are repaid.

Length of Your Bankruptcy
The length of your bankruptcy depends on the specific chapter you file:

Chapter 7 – Normally takes 90 days to complete
Chapter 13 – About 3 to 5 years

Chapter 13 takes longer because you’re negotiating different terms rather than halting all debt and liquidating everything immediately. However, during Chapter 7, creditors are not allowed to foreclose on your home, repossess your car, garnish your wages/accounts or take additional collection activity.

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