Opting for bankruptcy is one thing and how to go about is another. Once you have made up your mind to go for bankruptcy, the next thing is where to start.
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Bankruptcy laws differ in their impact and application. However, a general procedure can still be outlined to approach bankruptcy. So here is all you need to know when filing bankruptcy:
Keep your details handy before filing bankruptcy
Filing for bankruptcy is a complex process and it is best to be well prepared before opting for one. Here are the things you need to have with you when filing for bankruptcy:
- List out details of all your assets.
- Ensure that you have details of all your debts, the creditor details, the interest and minimum monthly payable amount.
- Gather all the documents such as credit card statements, notices from creditors and collectors, etc.
- Any other details as required by the court.
Enroll for credit counseling
The latest bankruptcy laws require a debtor to undergo credit counseling through an agency/counselor recognized by the US Govt. The debtor can proceed to file for bankruptcy, if the counseling agency recommends the same. It is important to remember that you need to file for bankruptcy within 180 days of getting a go ahead from the credit-counseling agency you approach.
Identify the state where you should file for bankruptcy
Bankruptcy cases are to be filed with bankruptcy courts, which are present in each state and county. Usually, you can file for bankruptcy in the court of the county you reside in, but under some circumstances you may have to file it under the jurisdiction of some other state.
For a hassle-free processing, consult an attorney to guide you
There are different types of bankruptcies and the laws for each type differ. Moreover, all the laws pertaining to bankruptcy are complex, and it may be a task for you to understand which type you fall under and what laws apply for your case. So, getting professional help is important.
In such circumstances, it is best to consult a bankruptcy attorney, who can not only help you identify where you stand but also provide the expert advice you need when filing for bankruptcy. Although filing for personal bankruptcy can be done without an attorney, it is always better to utilize the services of a bankruptcy attorney. It is, however, mandatory for corporate and business units to hire a bankruptcy attorney when they opt for bankruptcy.
Estimate the cost for hiring a bankruptcy attorney
Bankruptcy filing is a costly affair, so it becomes all the more important to check how you can cut corners without affecting the process in any way. It is a good idea to gather information about different attorneys and their average pay before zeroing in on any one. Typically, most attorneys would follow any one of the payment modes: charge a flat fee or charge fees based on the debts owed. While some attorneys would prefer a one-time payment, some would give you an option of paying in installments. Choose what suits your case best. And get recommendations from friends and family who might have used the services of such an attorney.
Route all your creditors through your bankruptcy attorney and be absolutely transparent with the trustee
Once you have finalized your attorney, ensure that all your creditors are referred to him or her. After your attorney files the bankruptcy petition, none of the creditors can contact you directly. All calls and meetings will have to be routed via your attorney from then on. This procedure is followed by a meeting with the trustee and creditors, where the trustee verifies details of your debts and assets. Make it a point to be transparent with your attorney, as he/she is the one who will present your case to the trustee. A slip here can prove costly.
With these steps, your work is done. After this, the trustee will review your debts and assets. Based on the type of assets (exempt/non-exempt) he/she will determine which assets can be sold off to clear your debts. Accordingly, Chapter 7 or 13 will apply to your case. Sixty days after the trustee forwards your petition, your debts will be discharged, provided none of your creditors challenges this petition within that 60-day period.