Step 1: Determining Your Income and Debts
When filing for bankruptcy you will need to identify all sources of income, what your monthly living expenses are, and list any major financial transactions you've been a party to in the last two years. You are also required to list all secured and unsecured debt such as personal or business loans, student loans, medical bills, credit cards and mortgages. Under the bankruptcy laws, you are also required to list any and all assets you have in the form of personal property or real estate.
Step 2: Filing for Chapter 7 Bankruptcy
Once you are ready to move forward with filing for Chapter 7 bankruptcy, you must first file a petition, along with several other detailed forms with the bankruptcy court. As you complete your required paperwork, you can list property you believe is exempt from liquidation. This process requires the assistance of an experienced bankruptcy attorney. If you make mistakes or fail to properly fill out required paperwork, a bankruptcy judge or any number of creditors could cause your case to be dismissed or your discharge denied. If your mistakes raise suspicions of fraud, your case could be turned over to investigators for possible criminal action.
Step 3: Filing for Chapter 13 Bankruptcy
Chapter 13 bankruptcy restructures your debt. Accordingly, you will be required to submit a debt reorganization plan, explaining how you plan on paying back your creditors. The first step in this process is determining how much disposal monthly income you have after you've paid your monthly living expenses. Your proposed repayment plan should be accurate and honestly reflect your ability to repay your creditors. In regard to unsecured debt, it should be clear to your creditors that they will receive as much or more under it than if your property was liquidated.
Under Chapter 13, you will be required to make payments on your debt over a set period, typically three to five years. If your plan is approved, it is possible that a single monthly amount will be deducted from your paycheck and divided among your creditors by a court-appointed trustee.
Step 4: Meeting with Your Creditors - the 341 Meeting
Typically, about four to six weeks after you have filed for bankruptcy, you will be required to attend the "meeting of creditors." Named after the section of the bankruptcy code that requires it, the "341 meeting" allows the trustee and creditors to ask you questions about your financial dealings. The creditors' participation varies by the type of bankruptcy you are filing - for example, in Chapter 7 bankruptcies, most creditors choose not to attend the 341 meeting, while in Chapter 13 bankruptcies, some creditors may attend, especially if they have objections to your proposed repayment plan. However, if an objection is raised and a compromise cannot be reached, a bankruptcy judge will review the issues involved and make a decision to resolve the matter regarding your petition.
Step 5: Court Approval of Your Chapter 7 or Chapter 13 Bankruptcy
No judge must approve a Chapter 7 filing. Unless the trustee or a creditor successfully objects, most if not all, of your unsecured debts will be discharged. While there are many possible grounds for objection, the vast majority of Chapter 7 bankruptcies are completed without objection.
However, in Chapter 13 bankruptcy, a judge must approve your proposed debt reorganization plan. Depending on your income and debts, you may or may not have to pay none, some or all of your debts. If the plan is accepted and you adhere to its terms, once the plan's terms expires, most, if not all, of your debts will be automatically eliminated.
Questions? Concerns? Contact Bankruptcy Attorneys at Lakelaw
Bankruptcy needn't be confusing or complicated. If you are facing foreclosure, suffering from mounting credit card debt, and want to put an end to harassing letters and calls from creditors, contact bankruptcy lawyers at Lakelaw today. We can evaluate your financial situation and discuss the options available to you.