When it comes to filing for bankruptcy, there are many things that consumers should know. Things aren’t always as easy as 1-2-3, but they don’t have to be impossible either. Getting to know a few key components to the bankruptcy process can significantly improve your case outcome.
A is for Automatic Stay— is one of the most immediate actions to take place once a bankruptcy case has been filed. This order stops the collection process and prohibits creditors from contacting debtors to collect on a debt once they have entered bankruptcy. An automatic stay order gives the debtor peace of mind away from harassing collection calls while their debts are being resolved.
B is for Bankruptcy type– there are two types of personal bankruptcy available for debtors. A Chapter 7 bankruptcy can provide complete debt elimination of unsecured debts with little out of pocket cost to the debtor. A Chapter 13 case provides debt reorganization by way of a repayment plan, typically spaced out over a period of three to five years.
C is for Credit Counseling— is a required course during the bankruptcy process. The credit counseling course provides the debtor with information about how to manage debts, smart money management tips and the importance of using credit wisely. All debtors must complete this course before their debts can be discharged.
D is for Discharge vs. Dismissal— are the two possible outcomes of a bankruptcy case. A debt discharge is the successful completion of a case and termination of the debtor’s liability by the court. A debt dismissal is the termination of an unsuccessful case by the court for failure to complete requirements, inaccurate information, disqualification for a discharge or suspicions of fraud.