If your considering bankruptcy as an option to rid yourself of the piles of debt you have incurred over the years you may be wondering how the bankruptcy process works and how long it will take? In this article I will do just that, walk you through the eight steps of how to file for bankruptcy.
Attend Credit Counseling
The first thing you will have to do before you can file any paperwork is sit down with a credit counselor for a one on one meeting to discuss your situation. Under the current bankruptcy laws you are required to see a credit counselor to if bankruptcy is truly the right answer for you.
In order to proceed forward with the bankruptcy process the credit counselor with have to sign off that you have gone through the credit counseling process and that you can file for bankruptcy.
Meet With Your Attorneys
The next step in the process is to set up a meeting with your attorney to start the initial paperwork process, and draft the provisions you plan to include into the bankruptcy judgment. The best part about this meeting is that the initial meeting is a lot of time free of charge.
Third, the next thing you will need to do is provide proof of income from the previous 6 months from the place of your employment. This will do a few things for you, first it will show the attorneys that your income in nonsufficient and will not be able to cover the debts and expenses at hand.
This will also help determine what type of bankruptcy you will be able file under. If your income is low enough you may be able to file for a chapter 7 which will liquidate all of your debts. However if you don’t qualify for chapter 7 you will still be able to qualify for a chapter 13.
With a chapter 13 bankruptcy they will be able to liquidate some debts by working with your creditors and setting up payment plans to pay off a portion of the debt.
Declare Safe Assets
Next, you will have to declare assets that you don’t want liquidated by the bankruptcy. Things that you will be able to have exempted from bankruptcy are your home, often known as the homestead exemption, and your car, which is known as the automobile exemption.
However if your home has a substantial amount of equity in it,they may force your to sell your home in order to use the equity to pay for a portion of the debt.
You may be able to keep other things like a few pieces of jewelry, books, and home furnishings. However any luxury items that you have will be liquidated. Finally, their are a few things that can not be liquidate like pension plans, 401k plans, IRA’s, Roth IRA’s, and even insurance policies that have a cash value.
File Paperwork With the Courts
Fifth, once you have the exemptions in place and paperwork properly filled out you will be able to file with the courts. However you should know that their will be a fee of $299 to do this when filing a chapter 7 bankruptcy.
When your going through the process of how to file for chapter 7 bankruptcy you may also incur other fees like attorney fees. This can be expensive so make sure you ask them about their cost up front so you don’t get hit with a huge bill at the end.
Meet With Bankruptcy Trustee.
In the next step on how to file bankruptcy you will need to meet with the bankruptcy trustee to discuss what their duties will be. A bankruptcy trustees job is to oversee the process between the debtor and the creditors.
He will hold meeting with both parties and see that everything is done in the way that the bankruptcy filings are written. This will include overseeing the transfer of property to be sold if it has to be, handling the money on items that are liquidated, and taking any complaints that the debtor or creditors may have.
Attend Financial Management Classes
As one of the final steps to completing the bankruptcy process you will also have to attend financial management classes. This only makes sense because if you are filing for bankruptcy and you have not learned your lesson you may soon be back in the same spot again.
If you want to know how to file for bankruptcy the right way so you don’t have to do it again you will complete these classes to learn from your mistakes. This may be a hard thing to do but go into these classes open minded knowing you will be better off in the end.
Obtain Final Discharge
Finally, the last step on how to file for bankruptcy yourself is to obtain the final discharge paperwork. This paperwork relieves the debtor from anymore legal obligation to paying a creditor.
However, one tip you should know is that some creditors and collection agencies will try to trick you into getting you to pay by calling you back at some point down the road. Whatever you do don’t do it. By paying the creditor or collection agency you will then be legally responsible for the debt that is owed.
As a final thought if all the steps I have covered in this article seem like to much just slow down and take them one at a time. The actually bankruptcy process will take anywhere from 3 to 6 months or longer to complete. Each state also have different ways of handling these processes. The above article is generalization of what will happen.