Filing Bankruptcy is a difficult decision to make. In 2008 over 1 million Americans filed personal bankruptcy in order to improve their financial situation. Bankruptcy can help you delay or even prevent foreclosure of your home, stop debt collector harassment and get a fresh financial start.
Many people turn to a bankruptcy attorney for help. Bankruptcy lawyers can help explain bankruptcy law and ensure that the bankruptcy process goes as smoothly as possible. Our attorney network can help you understand the complete details of bankruptcy; however a few general concepts follow:
Chapter 7
If you file a Chapter 7 Bankruptcy, all your debts will be discharged (wiped out) by court order, with the exception of some taxes, some student loans, and alimony or child support as well as some other exceptions to discharge. If you want to keep your home or car, you will have to continue to make payments on your home mortgage and your car loan. Typically, people who file for bankruptcy will wipe out all of their unsecured debts but continue to make payments on their secured debts. This means that credit card debts, bank loans, utility bills, business debts, medical bills, even bad checks are discharged in a Chapter 7 and you get to keep your home and your car.
Normally, when you file a Chapter 7 Bankruptcy, you will not lose any property or personal possessions. Bankruptcy laws, both State and Federal, allow you to claim certain property exempt from creditors and debt collectors.
Chapter 13
A Chapter 13 Bankruptcy is completely different from a Chapter 7. Instead of having your debts immediately discharged, you commit to a repayment plan that may be between three to five years, depending on your income level. Your debts may be paid in full or you may pay only pennies on the dollar. At the end of your payment plan, the remaining balances on your debts are discharged, except your mortgage, student loans, child support, and some other exceptions. This means that you may be able discharge the remaining balance on your credit cards and other unsecured debts, even if you have only paid a small fraction of the balance owed. Typically, most Chapter 13 cases are partial payment cases. In a Chapter 13, you may be able to keep all of your property and personal possessions, regardless of whether you qualify for any exemptions.
A Chapter 13 Bankruptcy may work for you if:
How does the Bankruptcy process work?
We will put you in touch with one of our network attorneys, and they will ask you to complete a bankruptcy intake form. This form will contain detailed information regarding your assets, expenses, income and debts. This will allow the attorney to analyze your case to determine which chapter of bankruptcy is right for you. Then, you will be required to take an approved credit counseling course, which will cost you about $30. The United States Trustee's Office maintains a list of approved credit counseling courses. Once you have completed the credit counseling course, you must print off the certificate of completion. The certificate is good for 180 days from the date of completion. Then you will need to get five to seven months worth of bank statements from all bank or investment accounts that are currently open or have been open during the last seven months. This includes all accounts where your name is listed as a joint account holder or custodian. If you are self-employed you will need the last 12 months of bank statements. You also need seven months of pay stubs from any place where you have worked at during the last seven months and any other income related documents like unemployment checks or Social Security checks. Additionally, you must get your last two years of income tax returns. You must also provide a list of all of your personal assets. This includes, but is not limited to, retirement accounts, boats, household goods and automobiles.
Then, if you decide to file the case, our network attorneys will prepare your bankruptcy petition for filing with the United States Bankruptcy Court. A bankruptcy petition will include a list of your monthly income, expenses, your property and possessions, and names and addresses of your creditors.
After the bankruptcy petition is prepared, you must review the petition, sign it, and file the bankruptcy petition with the Bankruptcy Court. Once the bankruptcy petition is filed, that same day, the court will issue an automatic stay which prevents creditors and abusive and harassing debt collectors from contacting you or trying to collect debts under any circumstances.
About four to five weeks after the case is filed, there will be a meeting of the creditors at the U.S. Courthouse. This is a mandatory meeting that you and your attorney must attend. You must bring your driver's license and Social Security card. At the meeting, the bankruptcy trustee will ask you to verify that all the information in the court papers is correct. Within a few days after this meeting, you must complete a financial management course and return the certificate of completion to our office. Once our office receives the certificate of completion, we will file the certificate with the court.
In a Chapter 7 Bankruptcy the court will usually issue a discharge after about ninety days. If you have filed a Chapter 13 Bankruptcy the court normally confirms the plan within a few weeks. After the plan is confirmed, you must make monthly payments to the trustee for the three to five years, depending upon the length of your Chapter 13 Bankruptcy plan. At the end of the repayment plan, the court grants a discharge of your debts.