How to File Bankruptcy
Filing for bankruptcy can be a difficult decision, but it’s often the right one.
Bankruptcy laws vary by state and can affect what debts you’re allowed to discharge and how much of your property will be protected from creditors. To learn how to file bankruptcy, read on.
What Is Bankruptcy?
Bankruptcy is a legal procedure that allows an individual or business to get rid of some or all of his or her debts. If you file for bankruptcy, certain types of debts may be dismissed or discharged, meaning that you don’t have to repay them. Other types of debts may be restructured so that you can pay them over time, rather than immediately.
There are two types of bankruptcy available: Chapter 7 and Chapter 13. Both have similar goals, but they work in different ways.
Chapter 7 bankruptcy requires liquidation of most assets in order to pay off creditors. The court will sell your property and distribute the proceeds among your creditors according to their priority ranking. You’ll be given a discharge and will no longer be liable for any debts included in your bankruptcy case.
Chapter 13 bankruptcy is sometimes referred to as repayment bankruptcy because it gives you the option to repay your debts over time by making agreed-upon monthly payments directly to your creditors through a court-appointed trustee. If you’re successful at making these payments, you’ll receive a discharge at the end of the payment plan period (which usually lasts three to five years).
The Bankruptcy Process
Bankruptcy can be a confusing and intimidating process. With so many legal requirements and obligations to meet, it can be difficult to know how to file bankruptcy.
The first step in the bankruptcy process is to file a petition with the bankruptcy court handling your case. This petition lists your debts and assets, as well as any expenses that you incur during the case. The petition also includes information on how much money you make each month.
You must file your petition with the clerk of court at least 30 days before any payments are due on any of your debts listed in your petition. If there is an emergency situation or if there is a creditor who will not accept payment less than 30 days before it is due, you may file your petition sooner than 30 days before it is due.
Next up is filing your petition with the court. Filing fees vary from state to state, but they’re typically between $300 and $500. Once your petition has been filed, you’ll have to wait for an official hearing date. This will be when creditors will come forward and offer their claims against you in court.
Fortunately, you don’t have to know how to file bankruptcy alone. Bankruptcy lawyers are there to help you determine whether filing is right for you and guide you every step of the way through the filing process.
Thank you to the lawyers of Marty Martin Bankruptcy Law for the above information on understanding how to file bankruptcy.