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7 steps for getting bankruptcy

Published by admin on January 4, 2010

The law on bankruptcy gives you a chance to get a fresh start, to continue your life from zero, and it’s useful if you have more debts than assets. There are several types of bankruptcy that the law provides, butthe most common is the one known as Chapter 7 bankruptcy, or liquidation.

When you file for bankrupcy, all your assets (except for those that are exempt by law) are liquidated by an official appointed by the court, called a trustee. The money resulting from the selling of your properties is then used to pay your creditors, while many of the remaining debts will be canceled.

Here’s a step-by-step guide for filing bankrupcy:

Step 1: Ponder about all your options and decide whether you should file bankruptcy

Filing bankruptcy has long-term effects and you should think about all the implications of it. If your main problem is harassment from creditors, there are other variants you should consider, such as debt consolidation and debt settlement; bankruptcy should be used only if you have some serious amounts of debts.

Step 2: Get yourself an attorney

While the law doesn’t require you to hire an attorney for your representation in court, it’s better if you do, in order to have the best decisions involving bankrupcy.

Step 3: Comply with the requirements of the bankruptcy law

File a petition to the bankrupcy court for your area. If you have any problems in dealing with these forms, ask your attorney for advise, as he should be able to help you.

Step 4: Pay the fees

There are a number of fees you must pay for filing a bankruptcies. They include the case filing fee, administration fees, trustee charges, etc.

Step 5: Wait for the notice to be sent to the creditors

After you filed bankrupcy, paid the fees and complied with the legal requirements, most collection actions against your property will have to stop actions against you. The bankruptcy clerk will sent a notice to all your creditors and the trustee will hold a meeting of all the creditors in about a month after you filed the petition.

Step 6: Cooperate with the trustee

The next step is when the trustee will liquidate all your non-exempt properties. It’s best if you cooperate with the trustee and provide him all the financial records and documents he asks.

Step 7: The discharge

If everything goes according to plan and no one objects or asks for an extension, in two or three months, the bankruptcy court will issue a discharge order which releases you from most debts and prevents any further collection actions against you. A discharge against all of your debts is your goal, and while some creditors may file an objection, in 99% of the cases, you’d be discharged of them and you get a much-needed fresh start.

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