When is filing for bankruptcy right for you?
Filing for bankruptcy can be one of the greateset financial decisions of your life. Knowing what bankruptcy chapter to file can also be important when understanding how your monetary means correspond with the appropriate chapter.
Bankruptcy can prove to be very helpful when consumed with debt as in many cases, filing for bankruptcy may liquidate all debts if you qualify. Even a repayment plan in a chapter 13 bankruptcy may help make a huge difference and get you back on track toward financial stability.
Learning the process of managing your debts and declaring bankruptcy may be easier if you apply certain legal steps to your situation. A bankruptcy attorney may also provide you with the legal help you need to get through a bankruptcy.
Your current debt
When deciding to file for bankruptcy, it may be a good idea to make a list of all your existing debts and assets. This may help you later on when choosing the right chapter of bankruptcy to file.
These debts may include your rent and utilities, bills and credit reports.
Chapter 7 or chapter 13 bankruptcy
Once you have your list of debts, then you may proceed to declaring either a chapter 7 or chapter 13 bankruptcy. In some cases, debtors may look to take a means test to help them determine his or her qualifications for each chapter.
In general, if you make over $40,000/year than you are less likely to qualify for the chapter 7 bankruptcy. In this case, you may be obligated to file a chapter 13.
A chapter 13 bankruptcy may enable you to restructure your debts in such a way that relieves your debts over time.
During the process, you may also be required to attend a credit counseling program before filing for bankruptcy. In general, these meetings are geared to assess your financial struggles and to help you avoid incurring debts for the future.
You may also be able to negotiate with creditors to create a better budgeting plan to pay off your debts.
Petitioning to declare bankruptcy
It may be crucial to fill out all necessary paperwork to declare bankruptcy. This is usually regardless of the chapter you need.
Once the papers are complete, you may go to bankruptcy court and request a petition to file for bankruptcy. There may be some associated fees with filing the paperwork.
Attending court hearings
Aftre submitting your petition, it may be advised to attend all court hearings including your 341 meeting of creditors. In most cases, debt collectors will not fight you on your bankruptcy declaration, but there may some debts that you are not allowed to include in your file.
Your appointed trustee may also review your case and make decisions based off your current debts and creditors.
The bankruptcy judge’s decision
At this point, the judge may make a decision about your case. If your case does get discharged in a chapter 7 bankruptcy, it is likely that your debts will be completely eliminated. However, in a chapter 13, you may be held accountable to stack on track with your repayment plan.