Many people find themselves in financial difficulty following a job loss or catastrophic medical expenses, or from living beyond their means. If you find yourself being hounded by creditor phone calls every day, threatened with lawsuits or seizure of your property, then filing bankruptcy might your best option.
Filing bankruptcy requires that you qualify for the particular chapter most appropriate for you and that you provide documentation of your assets, debts, monthly expenses, employment, and other information. It is best if you consult with an experienced bankruptcy attorney who can advise you on your qualifications and which chapter under the bankruptcy code is most advantageous.
Most consumers with overwhelming debt that is mostly unsecured will choose to file Chapter 7. To qualify, you will have to pass a “means” test:
A Chapter 13 bankruptcy filing means that you will be paying back your creditors over a period of up to 60-months. Many people who face foreclosure or severe tax obligations choose this chapter so long as they can meet the monthly payments required under the plan. They must also continue to make their monthly mortgage payments.
Effect of Filing Bankruptcy
Once you file your petition, all legal proceedings must stop in what is called an automatic stay. This includes any foreclosure or other activities designed to seize your property, all court proceedings, and any collection procedures including wage garnishment. Creditors are prohibited from calling you as well.
Creditors with secured debts, such as mortgage lenders, can petition or move the court to lift the automatic stay as it applies to their debt.
You are required to complete a bankruptcy petition, which includes the following given under oath:
The credit counseling session can be set up by your attorney and can also be done by phone. If you are low income, you may be able to have the small cost for the course waived.
At the meeting of creditors, you will meet with the trustee who will ask some basic questions about your petition and address any concerns. Your attorney can explain what questions you will be asked. Typically, you will need to bring along your driver’s license and some other forms of identification.
If you filed for Chapter 13 protection, your plan will either be accepted or rejected by the trustee.
Creditors have 60 days to object to the discharge of your debts to them. If none are filed, you will receive a notice from the court discharging your debts. In a Chapter 13, your obligations to your creditors are satisfied once the plan’s payments are completed in the designated time.
Filing bankruptcy can save you thousands of dollars in debt, save your home, and give you a “fresh start.”