Understanding the Bankruptcy Process

Considering filing for bankruptcy can be stressful. If you have researched alternatives to bankruptcy and are still looking to file, the basic process to get started can be confusing. You and your lawyer can discuss the optimum time to file and when to start debt counseling. Debt counseling should happen at least 180 days prior to filing for a bankruptcy. This evaluation of your finances will often result in a budget plan. Once your counseling has been complete, gather all necessary paperwork. This paperwork should include paystubs, income information, child support and pensions, detailed business records for income, all recent bills and 401k statements. You may also need your past 2 years of filed tax information and various other paperwork that your attorney can help you sort out.

Once your paperwork has been collected, your next best option should be speaking with an attorney. An attorney can help you process the paperwork necessary to file and offer sound legal advice in what you should do and how to proceed. Your attorney may request you take a means test to determine if you are eligible for a Chapter 7, or “straight bankruptcy”. Under a Chapter 7, all non-exempt assets may be sold and the money earned dispersed among creditors to pay back debt. If you are suggested to file a Chapter 13 Bankruptcy, also known as a “reorganization bankruptcy”, a court-approved payment plan will be put into place to help you pay off your debt in about 3 years. Under a Chapter 13, you are able to keep all your property that is both exempt and non-exempt.

What happens after filing?

Once you have filed, all harassing calls from creditors and collection agencies get an automatic stay placed on them and calls should stop. This tends to be the biggest “relief” part for most people. Also, if wages were being garnished, they should be restored and foreclosure proceedings will halt as well. About 1 to 2 months after you have filed, you will meet with your creditors to discuss your financial situation. If you filed under Chapter 7, now may be when all non-exempt property may be sold to pay back creditors. Exempt property includes burial plots, jewelry, clothes, household items, some vehicles and life insurance policies. Generally after about 6 months’ time, you may be discharged. Once you are discharged by the federal bankruptcy court, a credit score will show that you filed for a bankruptcy for up to 10 years. But do not worry; things will start to go back into place. Bankruptcy grants you a fresh start and a way to get back onto your feet.

Are you ready to file?

If you are ready to file for bankruptcy and have looked over the process, frequently asked questions and alternatives that may be available to you, please contact our firm. Hiring an attorney will guarantee you the most stress-free way to file and can help you gain answers to other questions you may have regarding your specific situation.