How to file bankruptcy
Bankruptcy is the last option that any person would decide on. If a person files a bankruptcy then it can leave a mark on his personal credit history and goodwill or his companies reputation for as long as ten years. But there are times when filing for a bankruptcy is the only option that is remaining for the person or the company.
Now the question comes how do you file a bankruptcy. Well here is some useful advice that would help you to work out your decision.
The first thing that you should do before you file a bankruptcy is look out for alternatives. Look out for potions that you can work out to avoid a bankruptcy. If there is no option that you can look up to then think of filing bankruptcy. Well if you file for a bankruptcy you would have to start every thing from a scratch. According to the Bankruptcy Abuse Prevention and Consumer Protection Act followed in the United States any person before he files a bankruptcy should go in for a consumer credit counseling session. This counseling should be obtained from a body that has been approved by the U.S. Trustee within a specified period of time before the bankruptcy filing date. This counseling session would give the person alternatives to filing a bankruptcy.
After the counseling still if bankruptcy is the only option left then the person should go ahead with it. There are two types of bankruptcies that can be considered, either Chapter 7 bankruptcy or Chapter 13 bankruptcy. Out of these Chapter 7 is the most commonly filed bankruptcy. Under this the person straight away files for a liquidation bankruptcy, but this is more difficult to file. The Chapter 13 bankruptcy involves a repayment plan for the person.
Once you have gone through the condition specified in both the chapters then you should look out for some legal help so that you understand the finer aspects of the filing. There are many people who do not consider taking any legal help but it is always advised that a legal look out would be better for a person who decides to file bankruptcy. After you have decided on your lawyer then arrange for a personal meeting with him and go over the case. The lawyer is supposed to ask you questions and is also supposed to answer all your queries. The lawyer will help you in deciding which chapter of the bankruptcy will be better in your case and he will also help you in finishing the means test prescribed by the Bankruptcy Abuse Prevention and Consumer Protection Act.
The next thing that you should do is, calculate how much is the whole process going to cost you. The fee for filing a
bankruptcy varies. There are a quarter of lawyers who would typically charge a flat fee, whereas there are a section of lawyers that would charge a fee that depends on the total debt that you have. Besides these types of lawyers there are lawyers who would require you to pay an upfront fees before they file your bankruptcy. Once you have hired a lawyer then you can ask your creditors to carry out further communication with your lawyer.
The next thing is that you would have to look forward to is meeting your creditors. After the lawyer submits your formal request then you are contacted via mail about the meeting date with your creditor, which is called as a 341 meeting in terms of bankruptcy. This meeting is important; as it would make sure that you have been honest in answering the questions on the bankruptcy petition. Besides it also makes sure that you have understood all the conditions and have decided to file a bankruptcy. Besides this it is important that you should have met your lawyer before this meeting so that he can go over all the debts and the situations in the list. You are supposed to mention a list of your assets. Besides the lawyer would also have a set of sample questions that you can rehearse over before going in for the meeting.
Make sure that when you are filing a bankruptcy you dont use any of your credit cards as this can give the creditor a chance to confront the release of the debt that you owe. Moreover if you have got into a debt knowingly then you cannot discharge the debt if the creditor confronts you with a lawsuit during the bankruptcy case.
In case of a Chapter 7 bankruptcy the trustee will decide on the liquidation of the assets to pay back the creditors. If the trustee decides that none of your assets can be liquefied then a no distribution report is filed with the bankruptcy court, but on the other hand if the assets are non exempt then they are sold off and the money is used to make the payments to the creditors. In some cases in Chapter 7 bankruptcy there are chances that you may not have to repay your creditor but in Chapter 13 you will have to pay back the creditors in a limited time period.
On the 60th day after your 341 meeting with the creditors is the first deadline for the creditors to file lawsuits to confront the discharge of debts. If they do not file any lawsuits then you would get a notice of discharge of debt under Chapter 7 bankruptcy, which means that you have no compulsion to pay back the discharged debt. In case you have filed a Chapter 13 bankruptcy case, then you will receive the notice of discharge about 30 to 60 days after your final payment has been made and the trustee makes certain that your payment plan has been monitored and accomplished.
Before you file a bankruptcy make sure that you have no option left besides it. Take legal help and start a fresh life if you have filed a bankruptcy.
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