Navigating bankruptcy proceedings can become overwhelming. There are a lot of rules, regulations, and laws that you must follow. The decision to file for bankruptcy is difficult, but it may be the best option for you if you find yourself in financial trouble.
Filing for bankruptcy can help you get out of debt and start fresh. First, however, it's important to understand the process and what to expect if you're considering bankruptcy. So read on to walk through everything you need to know about filing for bankruptcy.
1. Bankruptcy Definition
Bankruptcy is a legal process that allows people or businesses to get out of debt. When you file for bankruptcy, an automatic stay is placed on all your creditors, which means they can't try to collect the debt you owe them.
There are two main types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy, also known as liquidation bankruptcy, allows you to discharge your debts and have a fresh start. You must pass a means test to declare chapter 7 bankruptcy. This test is used to determine if you can repay your debts.
Chapter 13 bankruptcy is also known as a reorganization bankruptcy. This type of bankruptcy allows you to reorganize your debts and create a debt payment schedule. For Chapter 13 bankruptcy qualification, you must have a regular source of income.
The type of bankruptcy you file will depend on your financial situation. If you have a regular income and can repay your debts over time, you'll likely file for Chapter 13 bankruptcy. If you don't have a regular income or your debts are too high to repay, you'll likely file for Chapter 7 bankruptcy.
A bankruptcy lawyer can help you determine for which type you qualify.
2. Bankruptcy Navigation Process
Once you have determined which type of bankruptcy you qualify for, you can file a petition in a bankruptcy court.
When you file for bankruptcy, you will fill out lots of paperwork. This paperwork will include your financial information, such as your income, expenses, and debts. You will also need to list all your assets, including your house, car, and any other property you own.
Once you have filed for bankruptcy, you will need to attend a meeting with your creditors. At this meeting, your creditors will have a chance to ask you questions about your bankruptcy case. You will also need to give your creditors a chance to object to your bankruptcy.
After you meet with your creditors, you will need to attend a hearing in front of a bankruptcy judge. At this hearing, the judge will decide whether or not to grant you a bankruptcy discharge.
If you are granted a bankruptcy discharge, your creditors will no longer collect your debts. However, you will still be responsible for paying back certain debts, such as student loans and child support.
If you find all the above steps overwhelming, consult a bankruptcy lawyer to discuss your options. The bankruptcy attorney helps you understand the bankruptcy process and ensure that you do everything correctly.