How To Claim Bankruptcy – A Laymans Guide
Claiming Bankruptcy should not be entered into lightly.
Within 180 days of filing for bankruptcy, the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act makes it law that an individual must get some form of credit counselling.
This counselling is intended to make the individual aware of alternatives to filing for bankruptcy.
Of the many versions of bankruptcy, chapters 7 and 13 are probably the most well known.
Although it involves the liquidation of almost all personal assets, including your residence if you own it, chapter 7 bankruptcy is often the preferred way to file.
However, after all relevant assets have been liquidated, any outstanding debt (there are exceptions, such as tax), is cancelled, allowing a totally fresh start.
Chapter 13 does not require the liquidation of all personal assets. It works differently in that a repayment plan is put in place to repay all creditors over a 3 to 5 year period.
Some individuals file for chapter 7, despite having sufficient income to enter into a chapter 13 repayment plan. To ensure that repayment is made when ever possible, the legislation introduced in 2005 requires all applicants for chapter 7 to complete a means test
Not hiring a lawyer is a false economy. You will need help to fill in your details for the BAPCPA’s means test and a lawyer will help decide the most advantageous form of bankruptcy to file under.
Appointing a lawyer instantly triggers what is called “automatic stay” and is a form of protection from creditors in that they can thereafter no longer pursue you directly for payment of debts – they have to deal directly with your lawyer.
You will be required to draw up a list of debtors and a list of your assets. These will be reviewed at the meeting of creditors (what’s called a”341 Meeting”). where you have to answer a series of questions on oath.
The court decides, in a chapter 7 filing, the assets to be sold and the proceeds distributed amongst your creditors, any remaining debt is then written off and you are no longer liable, resulting in a clean financial slate.
In a chapter 13 case, a repayment plan is made, paying all creditors in full over 3 to 5 years, based on your actual ability to pay according to the means test.
60 days after the 341 meeting, your creditors can challenge the discharge or aspects of it. If no petitions are received by the court, a notice of discharge of debt will follow within a few days under chapter 7. In the case of a chapter 13 filing, notice of discharge is issued 30 – 60 days after the repayment plan has been completed, and verified by the court.
If you are wonderinghow to claim bankruptcy, I recommend that you visit www.howtoclaimbankruptcy.net for more free information, including advice on how to rebuild your credit position after bankruptcy has been completed.
Acceptions:
Bankruptcy and Related Law in a Nutshell (Nutshell Series)This comprehensive guide covers bankruptcy issues and laws. Written by experts in the field, the text discusses judicial debt collection, creditors with special rights, debtors' state law remedies, commencement, conversion, and dismissal of a bankruptcy case, automatic stay of collection, creditors’ and debtors’ rights, exemptions, collection, and pre- and post-bankruptcy transfers. Also discusses the effect on secured and unsecured claims, leases and executory contracts, and allocation of judicial power over bankruptcy matters.
