What Are The Steps Involved In Filing For Bankruptcy?
Bankruptcy is a legal process that involves an organization or an individual who is unable to pay their outstanding debts. The most common way in which the bankruptcy process begins is whereby the debtor files a petition, in another scenario the bankruptcy process is brought about on behalf of the creditor, a less common way.
Bankruptcy is a legal process created for the purpose of freeing individuals and organizations from their debts at the same time providing a repayment opportunity for the creditor.
Choosing to file for bankruptcy is a big decision to make.
There are a lot of considerations to make before making this type of decision such as Understanding which type of bankruptcy will best suit you and keeping in mind what will the chosen bankruptcy not do for you, evaluate your options, and prepare for the consequences as a result of filing for bankruptcy.
Below are steps explained by BLC law center that you need to take whenever you want to file for bankruptcy:
Step 1: Find a Good Attorney
Your first step which is very important is to find an attorney who is very experienced in the field of bankruptcy law. You can find a good attorney law through recommendations from family members or friends, for individuals who decide that the legal counsel have to be paid via their job, online directories and country directories usually have directories containing bankruptcy attorneys information.
The price of the attorneys may be intimidating so it is important to keep in mind that some attorneys work for no or little charge. As the saying goes “If a deal is a too good, think twice”, the cheapest attorney might not be ideal for you.
Step 2: A bankruptcy counseling session has to be conducted
The next step of filing bankruptcy involves two compulsory credit counseling sessions that must be finished by a counseling agency that is chosen by the judiciary. In this session, the counseling agency will advise you on the advantages and disadvantages of filing for bankruptcy and recommend you to make other choices rather than filing for bankruptcy.
Also in the first session, the counseling agency has an obligation to check and discuss your budget with you.
Step 3: Filing for Bankruptcy With the Court
Your next step will be to file with the court after the counseling process. This is the point at which your creditors should stop calling you enquiring about their debts so as to collect it as your bankruptcy would be appearing on your credit report.
An automatic say prevents all the legal activities from occurring from the minute the bankruptcy is filed and this is a result of bankruptcy invoking it.
Step 4: Liquidation or Repayment
Depending on the type of bankruptcy you have decided on either chapter thirteen or chapter seven, this step will include selling your commodities of value so as to repay the people you owe and that is chapter seven. It may also involve you repaying a portion of the debt that you had owed and that is chapter thirteen.
The schedule for bankruptcy differentiates with the type of bankruptcy that you filled:
- Initial fifteen days:-The court will require you to hand out the paperwork. This is also when the timeline for repayment is created for the individuals who choose chapter thirteen.
- Within thirty days:-This is the period in which individuals are required to make their initial payments to the bankruptcy trustee for those who chose chapter thirteen as their type of bankruptcy. But for those who decided to choose chapter seven type of bankruptcy, they get the chance to choose what type of debts they would desire to reaffirm
- After forty-five days: -A meeting of creditors will be held on the demand of the court so as to ascertain the information that was provided by you to be true and valid.
Step 5: Complete a Debtor Education Course
You will be required to finish the education course provided by the green path which is: the debtor education session which can be completed through reading a book and speaking with a counselor or online, and the other form of education course is the pre-filing bankruptcy counseling.
Step 6: Debt Discharge
The last step in filing for bankruptcy. All the eligible debts that you, are discharged at this step. This because the bankruptcy removes your duty to pay your debts to the creditors and thus clears away your debt.
If you were having stress, anxiety or sleepless nights due to the weight of the debts then you can be at relief but not to forget that you will now have to rebuild your credit.
Rebuilding After Bankruptcy
Now that you have filed for bankruptcy you will be liable to fewer interest rates, and it will be very difficult for you to get credit as the filling of bankruptcy will reflect on your credit report for the period of ten years and will have a negative impact on your credit score.
Rebuilding your credit will involve you opening a secured credit card that reports to the credit bureaus, paying your creditors on time, and keeping your balances low