When people attempt to learn how to file bankruptcy, they often search online and offline for information on the basic steps from paperwork to discharge. Credit card companies and other creditors are not out to help the debtor during bankruptcy proceedings. They simply want to get their money back. Here are the basic steps of how to file bankruptcy.
Step 1: Make sure there is no other option. Bankruptcy discharge will stay on a credit report for up to 10 years. During that time, credit scores will be lower than ever before so making sure you have no other option aside from bankruptcy is a crucial step in filing. Credit that is damaged by late payments or no payments at all may not be harmed drastically by discharge however.
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Step 2: Choose the best type of bankruptcy. There are two common types of bankruptcy - Chapter 7 and Chapter 13. Chapter 7 bankruptcy liquidates all assets and relieves debt completely. During proceedings some property can be salvaged with the help of a bankruptcy professional. Chapter 13 places all debts on a repayment plan. The debtor will need to list all bills so complete honesty is essential.
Step 3: Meet with a bankruptcy lawyer. While many people feel they can attempt to file all paperwork on their own, deadlines, meetings with creditors and repayment options are what attorneys are trained to handle. The best option is always to seek out professional help before filing a single bit of paperwork.
Step 4: Take the means test. During one of the first meetings with a lawyer, a means test will be taken. The means test will be reported to the attorney as a basic judgment as to whether a chapter 7 bankruptcy claim is acceptable.
Step 5: Pay all relevant fees. Fees associated with filing bankruptcy can differ from state to state. Some lawyers even allow for payments on court filing fees and legal fees. However, all legal fees will need to be paid in full before the proceedings can be started as a lawyer cannot be a creditor in a bankruptcy case.
Step 6: Send all creditors call to the attorney. One huge benefit of filing an attorney aided bankruptcy is the "automatic stay". Once a lawyer is handling the case, creditors cannot call about any debts once they have been informed about the bankruptcy and the lawyers contact information.
Step 7: Meetings and deadlines. Once the creditors have met and a 60 day waiting period for challenges from creditors has passed, the bankruptcy will be discharged.
If you want to learn about how to file bankruptcy, choose a lawyer to explain the process in full. The amount of paperwork and legal strings attached to debt can leave a person spinning out of control with no relief from debt months after filing the first petition.
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