Declaring Yourself Bankrupt – The Process
Believe it or not, the bankruptcy laws are there for your protection. The old days of companies, particularly credit card companies, rewarding people for loyalty have long gone and in the current economic climate financial institutions generally have only one interest – their bottom line. Declaring yourself bankrupt offers a way out.
However, before declaring yourself bankrupt, you should examine every possible alternative avenue. Bankruptcy stays on your credit report for up to ten years, and under the Bankruptcy Abuse Prevention and Consumer Protection Act, 2005 (”BAPCPA”) it is now law that anyone filing for bankruptcy must, within 180 days of filing, attend US Trustee approved consumer credit counselling to ensure that all alternatives are explored.
If, after counselling, it is decided that bankruptcy is the only way forward, certain decisions have to be made.
The first thing to do is to determine the relevant chapter to file under. The two main chapters are 7 and 13. Chapter 7 results in the selling of your goods, afterwhich you have no further liability for any debt and is therefore often the most favored option. Chapter 13 is a 3 – 5 year repayment plan. Which type you file under is often determined by the means test applied under the BAPCPA rules.
The second thing to consider is legal representation. Ironically, declaring yourself bankrupt is not an area where you want to save money. Lawyers are not cheap, but it is highly recommended that you hire one, and make sure they are aware of the laws in your state.
The third thing is most important. Don’t under any circumstances use your credit cards once you have filed for bankruptcy. If the company finds out ( and they will) that you used your card knowing you were unable to repay, your petition for bankruptcy can be thrown out.
”Automatic stay” is triggered when your lawyer files your bankruptcy case. Creditors then have to approach your lawyer direct regarding any debt, thus taking the pressure off yourself.
A meeting of creditors, which you have to attend, will be called shortly after filing for bankruptcy. This last about ten minutes and you are questioned, under oath so that the truth of your financial statement can be proved. Beforehand you will have submitted a list of creditors and your personal assets.
In a chapter 7 filing, the trustee will determine which assets are to be sold and the proceeds used to pay your creditors. Any outstanding debt remaining after liquidation will be written off and you will no longer owe anyone anything. Shortly after the 60th day following filing, a notice of discharge will be received by the individual.
In a chapter 13 case, a repayment plan is implemented over a 3 – 5 year period in accordance with the findings of the means test. There are no assets sold. Notice of discharge is usually received 30 – 60 days after the last payment has been made.
For further free informatiregarding regarding bankruptcy go to www.declaringyourselfbankrupt.org where you will find a host of useful informatiregarding and tips regarding declaring yourself bankrupt. You can get a unique content version of this article from the Uber Article Directory.
