Ways & How

how to file bankruptcy

how to file bankruptcy how to file bankruptcy

Bankruptcy is derived from the Latin words bancus which means a “bench” or “table” and ruptus which literally means “broken.” Bankruptcy is a legal status. A person who is in the state of bankruptcy cannot repay his or her creditors as soon as every obligation falls due. When this happens, make use of the process on how to file bankruptcy. There are six chapters in the Bankruptcy Code of the U.S.: Chapter 7, commonly known as straight bankruptcy; Chapter 9, which deals on municipal bankruptcy; Chapter 11, which deals on rehabilitation or reorganization; Chapter 12, which talks about the rehabilitation for family fishermen and farmers; Chapter 13, otherwise known as Wage Earner Bankruptcy; and Chapter 15, which deals on ancillary and other international cases. Of these chapters, Chapters 7 and 13 are the most common options. Once the debtor announces bankruptcy, his or her main purpose is to seek relief from debts. He or she can go for debt restructuring or debt discharge. To successfully file for bankruptcy, here are the majors steps required.

  1. See a lawyer and decide what option to take.

    for a lawyer who has wide experiences in bankruptcy cases. You both should discuss and agree on the appropriate bankruptcy procedure applicable to your case.

  2. Study Chapter 7. In essence, bankruptcy filed under Chapter 7 requires the debtor to surrender all his or her properties, which are non-exempt, to a trustee. The bankruptcy trustee will then liquidate and sell the properties. The proceeds of the sold properties will be distributed to the creditors of the

  3. Study Chapter 13. On the other hand, Chapter 13 is a stark contrast of Chapter 7. The debtor will not surrender his or her non-exempt properties, but his or her future income will be apportioned to repay the creditors. No property will be surrendered, liquidated or sold under this chapter.

  4. Make a list of your debts. Clearly spell out your debts including those that are not reflected in your credit report. The listing is a requisite, even if you will not engage the services of an attorney. This is particularly applicable in Chapter 13.

  5. Make a list of your properties. These are your personal and real assets. The list is very important if you choose to file bankruptcy proceeding under Chapter 7. As an important reminder, do not make fraudulent transfers of your property by making it appear that you do not own the same.

  6. Make a list of your creditors. They will all be around during the hearing in court. Initially, you should ask them personally or through a formal letter for the possible amendment of the terms of repayment.

  7. Get copies of the documents needed. These are your tax returns, banking statements and recent payroll. These papers will help prove your present financial crisis or inability to pay off your debts the moment you will file your formal bankruptcy petition.

  8. Submit to a “Means Test.” Visit the website of the United States Trustee Program Means Testing. The test will determine whether or not you will qualify for Chapter 7 bankruptcy or if your case will fall under Chapter 13.

  9. Join a credit counseling program. The counseling program must be duly approved by the United States Trustee Program. Get a certificate of completion after attending the program. The certificate is a requisite before the court will consider your bankruptcy application either under Chapters 7 or 13.

  10. File your bankruptcy application. File it to the United States Bankruptcy Court. Your petition will be known as a “Statement of Financial Affair.” Pay the required filing fees. However, payment thereof can be arranged if you are in serious financial distress.

  11. Attend the first meeting with the creditors. The meeting is known as the “341 Meeting.” Non-appearance during the meeting will cause the dismissal of your application. In the meeting, the trustee or the creditors will ask questions as to the veracity of your application. Your answers will be under oath.

  12. Attend the bankruptcy hearing. During the hearing, the judge will deny or approve your application for bankruptcy under Chapters 7 or 13. In the event Chapter 7 is denied, the terms of repayment will be determined. Such repayment scheme will be presented to the creditors, who in turn will either approve or deny the same.

Though the steps on how to file bankruptcy look perplexing, the objective to be debt-free is definitely achievable. As the debtor, you will then have hope to start anew. You can expand your study on the Internet, so you’ll understand more about the other bankruptcy chapters under the U.S. Bankruptcy Code.


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