Often, individuals believe that bankruptcy is the best approach to relieving their debt problems. These people are also intimidated by the thought of filing, and while it is a complex and strenuous process it can be broken down into small steps to help better understand bankruptcy and to ensure that your case is not dismissed.
Before you even file before bankruptcy, you should evaluate your situation and review the pros and cons. This is best done with visiting a bankruptcy attorney for an initial consultation, who can go over the debts you have that are eligible for discharge. They will take into consideration your current income and liabilities, and the property that you currently own. Keep in mind that in a Chapter 7 bankruptcy a trustee will be assigned to your bankruptcy case that will be charged with liquidating your property in order to satisfy your creditors. A bankruptcy lawyer can discuss “exemptions” that may allow you to keep certain property. Once you have weighed your options, examined any alternatives, and decided to move forward it’s time to get started.
Step 1: Means Test
You’ll need to make sure that your income is not too high to disqualify you from filing Chapter 7 bankruptcy. The means test essentially takes into account for all your income and compares that to how much you how to determine if you have enough disposable income to pay your creditors.
Step 2: Property Evolution
AS previously mentioned, non-exempt property will be liquidated in a Chapter 7 bankruptcy, so a thorough documenting of all property needs to be taken place so that court can determine what will stay in your estate and what will go.
Step 3: Secured Debt Evaluation
You’ll have to make a decision about secured debt at this point. IF you have debts secured by some type of collateral you will typically have the option to reaffirm the debt, redeem it, or surrender it.
Step4: Credit Counseling
Everyone who files for bankruptcy must attend an approved credit counseling course within 180 days of filing bankruptcy. This helps you evaluate your alternatives once again, and will help you better understand how to resolve your debt.
Step 5: File Your Paperwork
This step requires a lot of paperwork including everything about your financial life: income, property, and debts, creditors, everything. You’ll also have to bring proof of credit counseling.
Step 6: Meeting of the Creditors
In this meeting the trustee will set up a meeting with your creditors. They won’t necessary show up, but it gives them and the trustee the opportunity to ask you about your situation.
Step 7: Financial Management Counseling
Another course that is mandatory is the personal financial management course. This must be attended before a bankruptcy can be discharged
Step 8: Bankruptcy Discharge Notice
Once you receive your official “Notice of Discharge” you will no longer be responsible for paying back the debts that the courts deemed dischargeable.