The Bankruptcy Filing Procedure
There are several legally required steps involved in filing for bankruptcy. Failing to complete them can result in the dismissal of your case.
Before filing for bankruptcy, people are required to complete a credit counseling session and receive a certificate to file with their bankruptcy petition. The counselor should review your personal situation, offer guidance on budgeting and debt management, and discuss alternatives to bankruptcy. You can find the names of government-approved credit counseling agencies in your area by calling the federal bankruptcy court closest to you or by going to its website.
Filing for bankruptcy involves submitting a bankruptcy petition and financial statements showing your income, debts, and assets. You will also be required to submit a means test form, which determines whether your income is low enough for you to qualify for Chapter 7. If it is not, you will have to file for Chapter 13 bankruptcy instead. You will also need to pay a filing fee, though it is occasionally waived if you can prove you can not afford it.
You can get the forms you need from the bankruptcy court. If you enlist the services of a bankruptcy lawyer, which is generally a good idea, they should also be able to provide them.
Once you have filed, the bankruptcy trustee assigned to your case will schedule a meeting of creditors, also referred to as a 341 meeting for the section of the bankruptcy code where it is mandated. This is a chance for the people or businesses that you owe money to ask questions regarding your financial situation and your plans, if any, to repay them.
Your case will be decided by a bankruptcy judge, based on the information you have provided. If the court decides that you have attempted to hide assets or committed other fraud, you might not only lose your case but also face criminal prosecution. Unless your case is very complex, you typically will not need to show up in court before the judge.
After you have declared bankruptcy-- but before your debts can be discharged-- you must take a debtor education course, which will provide guidance on budgeting and money management. Again, you will need to acquire a certificate showing that you have participated. You can get a list of accepted debtor education providers from the bankruptcy court or from the Justice Department.
Presuming the court decides in your favor, your debts will be discharged, when it comes to Chapter 7. In Chapter 13, a payment plan will be approved. Having debt discharged means that the creditor can no longer try to collect it from you.
When to Declare Bankruptcy
Bankruptcy law exists to help individuals that have taken on an unmanageable amount of debt-- commonly as a result of large medical bills or other unexpected costs that are no fault of their own-- to make a fresh start. But it isn't an easy process and doesn't always result in a happy ending.
So before declaring bankruptcy, be sure to explore all your options and be prepared for some of the negative consequences described above. If you decide that bankruptcy is your only viable option-- as hundreds of thousands of Americans do every year-- remember that the blot on your record will not be permanent. By using credit cautiously in the future and paying your bills on time, you can begin to rebuild your credit and gradually put bankruptcy behind you.
For More Information About Filing Bankruptcy in Fountain Valley, California, Contact Thomas K. McKnight LLP At (800) 466-7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!