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, individuals are required to complete a credit counseling session and acquire a certificate to file with their bankruptcy petition. The counselor should assess your personal situation, give guidance on budgeting and debt management, and review 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 visiting 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 declare Chapter 13 bankruptcy instead. You will also need to pay a filing fee, though it is occasionally waived if you can prove you can't afford it.
You can obtain the forms you need from the bankruptcy court. If you enlist the services of a bankruptcy lawyer, which is usually a good idea, they should also be able to provide them.
When you have filed, the bankruptcy trustee appointed to your case will arrange for a meeting of creditors, also known as a 341 meeting for the section of the bankruptcy code where it is mandated. This is a chance for the people or companies that you owe money to ask questions regarding your financial situation and your plans, if any, to repay them.
Your case will be determined by a bankruptcy judge, based on the information you have provided. If the court determines that you have attempted to conceal assets or committed other fraud, you may not only lose your case but also face criminal prosecution. Unless your case is very complicated, you usually won't have 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 offer advice on budgeting and money management. Once again, you will need to receive 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.
Assuming 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 authorized. Having debt dismissed means that the creditor can no longer attempt to collect it from you.
When to File for Bankruptcy
Bankruptcy law exists to help people who have taken on an unmanageable amount of debt-- commonly as a result of large medical bills or other unexpected expenses that are no fault of their own-- to make a fresh start. However it is not an easy process and does not always result in a happy ending.
So prior to filing for bankruptcy, be sure to examine all your alternatives and be prepared for some of the negative consequences described above. If you determine that bankruptcy is your only reasonable option-- as hundreds of thousands of Americans do every year-- remember that the blot on your record will not be permanent. By using credit carefully 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 Westminster, California, contact Thomas K. McKnight LLP at (800) 466-7507 or visit our website at TKMLLP.Com for a free consultation!