Steps to Filing Bankruptcy

If you are thinking that it is possible that bankruptcy might be in your future there are some things that you should be aware of. Make sure that you have exhausted all other efforts before you decide on bankruptcy and check with a lawyer, even if you aren't planning on retaining one, remember you are still entitled to a free consult. You should know that bankruptcy will indeed literally ruin your credit history and could also ruin chances of future employment as many employers are now examining a potential job prospect's credit score as part of the routine application process. Remember, bankruptcy will remain on your credit for 10 years.

Changes made with the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005 really changed the U.S. Bankruptcy Code. Within 180 days of the date of the filing of a bankruptcy case you must have consumer credit counseling approved by the U.S. Trustee. The goal is to help you find options to bankruptcy. Then you have to decide which form of bankruptcy is your best alternative and which one is best for you. Chapter 7, the most popular, liquidates your assets and uses that money to pay your creditors, while completely eliminating your debt.

Chapter 13 lets you keep your assets but also sets up a legal repayment plan between you and your creditors. Chapter 13 is becoming increasingly popular with the extensive number of current foreclosures and Chapter 7 is much more difficult to get approved for. If you can gather up the cash it is a better alternative to hire a lawyer to handle your bankruptcy case but some prefer the do-it-yourself type. If you have decided to use a lawyer then they will be able to answer all of your questions but if you don't hire one then you have to do the research to answer your questions. Also, if you do retain an attorney then you can immediately forward all of your creditor calls to him.

The usual fees to retain an attorney for a bankruptcy case are $1,000-$3,000 and usually have to be paid in full and in advance. Some lawyers will charge based on your debt ratio, which could end up being a better route for you. The Means Test must be completed first and then your case has to be filed. The next step is the meeting of creditors, or a "341 meeting". This meeting allows the trustee to verify your information on your bankruptcy petition (debts and assets). It is important that all of the information that you have provided in conclusive and accurate.

Then your assets will either be liquidated and your debt wiped clean or there will be a repayment plan established. There is then a 60 day waiting period to see if your creditors dispute the discharge and if they do not hen your debt will be discharged. With a Chapter 13, your debt is not discharged until you have completed the payment plan.

Have you fallen victim to bankruptcy? Contact a Bankruptcy Attorney today!