How to File for Bankruptcy in DC

Recent economic problems and continued credit spending by consumers has pushed an increase in the frequency of bankruptcies in America. However, it does not seem to have affected the District of Columbia, as it was lower than all states in the country for bankruptcies per capita, other than Hawaii and Alaska in 2007. Nevertheless, bankruptcy is not only a last resort, and individuals should be aware of the options available to them. Federal government law outlines the bankruptcy process, but each state, and D.C., has the ability to change or make additions to these laws for their citizens.

Finding a Bankruptcy Attorney

With the existing options of bankruptcy, state variations and negotiation difficulties associated with filing for bankruptcy, it is extremely beneficial to hire a bankruptcy attorney for the duration  of the process. To find the best one for one’s given situation, there are many online services, however personal or business referrals are usually have the best results. These attorneys are experts in evaluating and forecasting financial situations, to create the most effective bankruptcy plan with any given debtor.

Bankruptcy Options

Chapter 7 bankruptcy is substantially more popular than the next two most common forms of Chapter 13 and Chapter 12. However, each has benefits and drawbacks according to each individual situation, such as:

1. Chapter 7, called “liquidation bankruptcy” because all of a the debtor’s property, other than exemptions, is liquidated to repay creditors. This results in nearly complete debt relief, but also in the loss of one’s possessions.
2. Chapter 13, called “rehabilitation bankruptcy” because of the financial reorganization and planning involved, is beneficial for debtors who maintain a steady income. All debt must be repaid, but no property is lost to the process.
3. Chapter 11 also called “rehabilitation bankruptcy” because it provides a process very alike that of Chapter 13. However, it is tailored for use by businesses, allowing them to continue operation, generating profits to repay all of their debts.

District of Columbia Exemptions

In the District of Columbia, the federal exemptions or the District’s own exemption list may be chosen when granted Chapter 7 bankruptcy. The exemptions accord to D.C. regulation include:

Filing the Petition

The relief of Chapter 7 bankruptcy is not available to everyone, and before filing a petition to the bankruptcy court, one must first pass the “means test” to determine their eligibility. After this, inventory of the debtor’s possessions must be taken. This should be done with utmost caution in order to avoid any possibility of bankruptcy fraud. Petitions are generally answered within 20 to 40 days, and if successful, creditors will be contacted immediately to arrange the “341 meeting.” This meeting is between the creditors and the debtor through a bankruptcy trustee, where for Chapter 13 cases the most vital step occurs of designing the repayment plan.