There are things you should consider before filing bankruptcy. It includes your eligibility to file bankruptcy, the types of debt you owe to your creditor, your monthly income, and living expenses. Bankruptcy enables a debtor to virtually pay all of his or her debts to creditors. You should take the opportunity to look into the specifics of each bankruptcy chapter. Doing so will enable you to decide on what would be the best option for you as you work on your bankruptcy case.
Hiring a bankruptcy attorney is important for you to understand relevant bankruptcy laws. Bankruptcy rules may be complicated. To avoid any issues during the bankruptcy process, it is beneficial for you to consult a reliable bankruptcy lawyer before you gather relevant documents and file for bankruptcy.
A bankruptcy proceeding starts when a filer submits a petition for bankruptcy to court. The bankruptcy court would evaluate your case and once they approve your bankruptcy petition, an automatic stay will be effective immediately. An automatic stay prohibits any collection activities from debt collectors. This would also stop phone calls, wage garnishment, foreclosure, and creditor harassment.
Struggling with debt is not easy. This is why declaring bankruptcy is important: it can help you have a fresh start with your finances. Filing a petition in bankruptcy has a lot of advantages. One of the main objectives of a bankruptcy filing, however, is for you to obtain a bankruptcy discharge. This will release you from the obligation of making payments for your debts.
It is difficult to repay debts while trying to meet your current needs. Understanding pertinent bankruptcy law will help you maximize the chance to rebuild your financial future. When filing bankruptcy, you need to provide financial statements and paperwork where you disclose all your assets and all the debts you owe.
Different types of debt can be discharged (in contrast to those that cannot be wiped-out). Dischargeable debts include unsecured debts like credit card bills and medical bills. Non-dischargeable debts, meanwhile, are secured debts, child support, alimony, student loan debt, and certain tax debt. You should know which types of debt are dischargeable and which are not when considering bankruptcy.
Bankruptcy lawyers can assist you on how to file a bankruptcy petition and will help you understand the advantages of available bankruptcy options for you.
What are the types of bankruptcy?
There are different types of bankruptcy. The most commonly used are Chapter 7 (liquidation bankruptcy) and Chapter 13 (reorganization bankruptcy). The usefulness of bankruptcy filings under each chapter will depend on your situation.
Filing Chapter 7 bankruptcy
When filing under Chapter 7, a bankruptcy trustee will be the one to liquidate and manage the sales of your nonexempt assets. The funds will then be distributed to your debt collectors.
A trustee is assigned for each bankruptcy case, who is tasked to manage transactions and evaluate claims. This is to prevent any interaction between the debtor and any creditor involved. This is helpful if you want to avoid any issues during the entire bankruptcy procedure.
At the end of the proceeding, a bankruptcy discharge can be obtained. This is usually after all your non-exempt assets have been sold.
It is important to be honest when providing information regarding your debts and financial statements to the bankruptcy court. If the court finds out that you did not fully disclose certain information, you may be sued for fraud and may be sentenced with fines and penalties.
Bankruptcy filing under Chapter 13
If you want to secure your properties while paying your debts, Chapter 13 is the best option for you. You may be able to save your home and vehicle while making payments to your creditors.
In Chapter 13, you will have to make a payment plan that will give you enough time to repay your debts. The debt-repayment plan would usually take three to five years. It would take longer than a Chapter 7 bankruptcy declaration but you will not be required to surrender any of your properties. Note, however, that the debt repayment plan must be realistic and is within your budget or ability to pay debts.
Failure to make regular payments would affect your bankruptcy filing and may cause a denial when obtaining a bankruptcy discharge.
What are the requirements for filing bankruptcy?
If you have decided to file for consumer bankruptcy, you must meet certain qualifications. A bankruptcy means test is used to determine the level of your monthly income, whether it qualifies for bankruptcy under Chapter 7 or Chapter 13. If you pass the means test, you must gather all documents regarding your properties and finances. You are required to fill out bankruptcy forms and then file a bankruptcy petition to the court.
Dealing with debt and financial problems is not easy. It is highly recommended to ask for legal help and assistance regarding your bankruptcy case. Contact us at Northwest Debt Relief Law Firm and have a fresh start with your finances.
