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 obtain a certificate to file with their bankruptcy petition. The counselor should review your personal situation, provide advice 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 going to its website.
Filing for bankruptcy involves submitting a bankruptcy petition and financial records 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 isn't, you will need to file for Chapter 13 bankruptcy instead. You will also need to pay a filing fee, though it is sometimes waived if you can prove you can not afford it.
You can acquire the forms you need from the bankruptcy court. If you enlist the services of a bankruptcy attorney, which is usually a good idea, they should also be able to supply them.
Once you have filed, the bankruptcy trustee assigned to your case will arrange for 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 individuals or businesses that you owe money to ask questions about 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 hide assets or committed other fraud, you may not only lose your case but additionally face criminal prosecution. Unless your case is really complicated, you typically won't need to appear in court before the judge.
After you have declared bankruptcy-- but before your debts can be discharged-- you have to take a debtor education course, which will offer advice on budgeting and money management. Once again, you will have 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 dismissed, in the case of Chapter 7. In Chapter 13, a repayment plan will be approved. Having debt discharged means that the creditor can no longer attempt to collect it from you.
When to File for Bankruptcy
Bankruptcy law exists to help individuals who have taken on an unmanageable amount of debt-- commonly as a result of large medical bills or various other unexpected costs that are no fault of their own-- to make a fresh start. However it is not an easy process and does not always lead to a happy ending.
So before declaring bankruptcy, be sure to examine all your options and be ready for some of the negative consequences defined above. If you decide that bankruptcy is your only viable option-- as hundreds of thousands of Americans do each year-- keep in mind 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 restore your credit and gradually put bankruptcy behind you.
For More Information About Filing Bankruptcy in Orange, California, Contact Thomas K. McKnight LLP At (800) 466 - 7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!
