HOW TO FILE FOR BANKRUPTCY

HOW TO FILE FOR BANKRUPTCY

If you file for bankruptcy, it will remain on your credit record for as long as ten years so you have to think about the decision thoroughly. But then if you are thinking of filing for bankruptcy then your credit is most probably not in a very good state. Bankruptcy opens a door to a new beginning. The Bankruptcy Abuse Prevention and Consumer Protection Act requires an individual to get a credit consulting from a US Trustee accredited entity within 180 days of the date of the filing for a bankruptcy lawsuit. The purpose is to make sure that the individual knows his alternatives.

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1. Bankruptcy Types
   
   There are two common types of bankruptcy:
   
   • Chapter 7 – a straight or liquidation bankruptcy
   • Chapter 13 – a repayment plan for individuals
   
   When filing a chapter 7, the BAPCPA imposes a means test making the process more complicated than chapter 13.
   
   Getting a Lawyer
   
   Some people may or may not get a lawyer but it is always most practical to hire one.
   
   Once you’ve selected a lawyer, you should arrange a meeting so you could study your case together. He will be able to advise you on which chapter will fit your financial matters.
   
   Hiring a lawyer offers another advantage: you do not have to deal with creditors yourself. A lawyer is responsible of speaking to them in your behalf. 
   
   The fees for filing may vary depending on the place where you intend to file the case. If you cannot afford to pay such fees, there are particular places where filing is free. Just remember never to use your credit cards when filing for a bankruptcy case or else a creditor can use this to question the discharge of the debt you owed or even your privilege to be discharged from any debt. 
   
   Meeting of Creditors
   
   After you file the case, you will be notified of a meeting of creditors. The purpose of this meeting is for the trustee to be able to make sure that you have been honest on your bankruptcy petition and that you understand and assent to filing for bankruptcy.
   
   In a chapter 7 case, the trustee will decide whether or not you have assets which can be liquidated and utilized to pay back your creditors. If the trustee decides that all your assets are exempt, he will then submit a report of no retribution with the bankruptcy court. If the trustee decides that some of your assets are non – exempt then they will be sold and used to pay your creditors. In a chapter 7 case, it is possible for you not to pay a creditor. In a chapter 13 however, you will have to pay your creditors within 3 – 5 years.
   
   Your creditors are given an allowance of 60 days to file lawsuits to contest the discharge of a certain debt. If ever they do not proceed to such action within that set deadline, then you will be notified of a discharge of debt if you filed chapter 7.