How to File for Bankruptcy: A General Overview

2007-03-08 10:33:40

( Financial )



Before you are even allowed to submit an application for bankruptcy, you must attend a credit counseling session with an agency approved by the United States Trustee’s office so that you can determine whether there is a need to file bankruptcy.

There are two main ways on how to file for bankruptcy:

Chapter 7 which is also known as straight bankruptcy eliminates most of your debts. There is a need however, to give up some of your property in order to pay what is owed. Different states have different laws on what type of properties can be taken from you so it is recommended that you investigate this.

The process of filing bankruptcy begins with a petition which is submitted to the bankruptcy court. The petition contains information on the property you own, your monthly sources of income, your debts for the last two years including the amounts you sold and obtained.

While your bankruptcy case is ongoing, the creditors do not have the authority to make demands for you to pay them. The court appoints a bankruptcy trustee who reviews your debts and assets, and determines which among your assets should be liquidated or surrendered to settle your debts. There are certain assets that are exempt from this process and this depends on your state laws.

If your property is under a current loan, you will have to give the papers to the court or make arrangements to pay for it during or after the case.

You can only file another chapter 7 bankruptcy case 6 years after you filed your former case.

The other way on how to file for bankruptcy is through Chapter 13. With this method, you are able to keep all your property, and settle your debts by paying off a little at a time monthly for 3-5 years through a signed agreement.
Aside from the bankruptcy forms you fill up, you also need to submit a proposal on how you will settle your debts. A creditors meeting is set and a confirmation meeting must be attended where you will know if your proposal has been accepted or rejected. If accepted monthly payments are given to the bankruptcy trustee.

At the end of the 3 to 5 year plan, the remaining unpaid balance on your debt is wiped out. If you are unable to continue your payment, the plan can be restructured by the bankruptcy trustee. If payments can’t be met and reasons are acceptable by court, the court may offer a hardship discharge. If neither of these options is approved by the court, you can convert to a Chapter 7 or have your Chapter 13 case dismissed. If case is dismissed, you will still owe the outstanding debt balance less any payments already made.

There is no such thing as filing bankruptcy online. Information on how to file for bankruptcy and filling up of forms can be done online, but you would personally have to go to court to file your case.


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