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Advice on How to File Bankruptcy

For people in adverse financial situations, a bankruptcy filing should always be the last resort. A record of bankruptcy stays on your credit report for ten years, affecting your financial credibility for quite some time. If you are considering bankruptcy, learn first if this option is right for you including how to file bankruptcy and make an informed decision.

Before you file a bankruptcy case, you are required by law to have a one-on-one session with a qualified credit counselor who will help you identify other options besides filing bankruptcy. If you must proceed, here are some things you need to know on how to file bankruptcy:

Bankruptcy is a legal proceeding that clears certain debt of an individual or business organization that is no longer capable of meeting financial obligations. For individuals, excluding farmers, the two types of bankruptcy that can be considered are chapter 7, in which the debtor’s assets are liquidated in order to repay credit and chapter 13, in which the debtor is given a fixed period of time to reorganize and repay his or her debt.

The new bankruptcy law requires individuals seeking to file under chapter 7 to undergo a means test, which will determine the person’s financial capability to repay debt. Debtors who file under Chapter 13 should have a regular source of income to be eligible.

Find out the specific conditions and requirements under each chapter so you can decide what is the most suitable in your situation. At this point, you may want to consider getting a lawyer who can provide assistance and knowledge on how to file bankruptcy.

When you draft and file a petition for bankruptcy, you must provide the bankruptcy court detailed information about your current income, expenses, assets and liabilities. Be accurate, thorough and completely honest when answering the forms to avoid delays or other serious consequences such as imprisonment. Be sure to include in the listing of debt all your existing debts. Official bankruptcy forms must be used in filing and they are available online or in stores selling legal stationery. Some forms even have self-help information on how to file bankruptcy.

The cost of filing a chapter 7 or chapter 13 bankruptcy petitions is more or less $200. Lawyer’s fees may range from $600 to $1200 depending on the type of bankruptcy.

After you or your lawyer has filed your petition, the next stage is called the “341 meeting”, where you will meet with the trustee and your creditors. Under oath, you will be asked simple questions to verify the information you have provided in your petition such as your assets and liabilities. After bankruptcy filing, your creditors may not continue to collect from you. You should be relieved from wage garnishment, eviction or foreclosure notices.

There are certainly a lot to consider on how to file bankruptcy but, most importantly, you have to consider if it’s the right choice and if you are willing to accept its consequences.

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Take Credit Repair after Bankruptcy Step by Step

Getting credit again after bankruptcy is a concern that seems too complex but it is in its real sense simple. Yes. One can have another chance at re-establishing his or her credit. This is through the process of credit repair after bankruptcy. In order to obtain this, one must develop great patience because re – establishing one’s credit do take time.

In credit repair after bankruptcy credit worthiness is important. Credit worthiness is usually measured by one’s credit history, which represents one’s financial reputation among creditors. Failing to pay off one’s credit card debt, not paying off the minimum monthly amount, missing a payment or not making one’s payments on time can lead one person on a path to damaged credit So if one is planning to do credit repair after bankruptcy it is important that his or her credit shows worthiness.

Satisfying all the demands of a  bankruptcy case is obviously the first intelligent step taken to credit repair after bankruptcy. The next step one will have to take is repairing one’s credit report. A credit report usually includes the approximate amounts and locations of a person’s bank accounts, charge accounts, loans, and other debts, bill-paying habits, defaults, bankruptcies, foreclosures, marital status, occupation, income and lawsuits.

Two or three years after filing for bankruptcy, there should be a possibility that one will want to start rebuilding good credit by applying for secured credit cards, preferably cards without annual fees attached to them. One could also do a research on the internet to see what others have done in similar situations.

In doing credit repair after bankruptcy, it is germane to start small. It is unrealistic to expect anyone to hand a person doing a credit repair after bankruptcy a $10,000 credit limit overnight. It will never happen. One should make monthly payments in the full amount. A person’s payment transactions will determine how successful his or her new credit report will be. One must never be late with payments for it could be another road to bad credit history.

In doing credit repair after bankruptcy, the stronger is a person’s current financial condition, the better. It is a must to convince lenders that one has left the bankruptcy behind. One must show that he or she is able to manage  money matters after the bankruptcy in such an efficient way. Prompt payments made in a full amount are very impressive to a credit lender.

However, if one is denied of a major credit card, he or she should not get distraught, and instead, he should try applying for a department store’s line of credit or a card issued by an oil company. These are small steps to start rebuilding a credit future.

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Knowing the Fundamentals – Bankruptcy Laws

Bankruptcy laws generally protect distressed people and businesses that can no longer pay their creditors. In the United States, bankruptcy laws are placed under federal jurisdiction as stated in the United States Constitution (in Article1, Section8), allowing the Congress to enact “uniform laws on the subject of Bankruptcies throughout [all] the United States [districts].” Its implementation, however, is realized depending on the different district state laws. Nevertheless, much of the relevant statutes are already incorporated within the Bankruptcy Code, located at Title11 of the United States Code. Other statutory bankruptcy laws are found in Titles18 (crimes), 26 (internal revenue code) and 28 (judicial procedure) of the US Code.

Features of the US Bankruptcy Laws:

An estate consists of all property interests of the debtor at the time of the filing, and which are subject to certain exclusions and exemptions. This may also include other items, including (but not limited to) property acquired by will or inheritance within 180 days after case commencement. In the case of a married person in a community property state, the estate may include some community property interests of the spouse even if the spouse has not filed bankruptcy.

Under the revised bankruptcy laws (1984) the bankruptcy judges in each judicial district function as a US bankruptcy court, a ‘unit’ of the US district court. Formally, each district court ‘refers’ practically all bankruptcy matters to the Bankruptcy Court. Yet in rare circumstances, a district court may in a particular case ‘withdraw the reference’ or take the bankruptcy case away from the Bankruptcy Court and decide the matter itself.

Decisions of the bankruptcy court could be generally appealed to the District Court, and then to the Court of Appeals. However in some jurisdictions, a separate court called a Bankruptcy Appellate Panel composed of bankruptcy judges hears particular appeals from bankruptcy courts.

Creditors might race to the courthouse to improve their positions against a debtor, yet a protective automatic stay is imposed at the moment a bankruptcy petition is filed. This generally prohibits the commencement of actions, judicial or administrative, against a debtor for the collection of a claim prior to the case. The stay also prohibits collection of property of the estate itself. A secured and court-permitted creditor, however, may be allowed to take the applicable collateral. Permission may be granted by filing a motion for relief from the automatic stay.

Stay-relieved secured creditors may look to the property that is the subject of their security interests. Security interests are considered liens on the property of a debtor. Yet, there still are unsecured creditors – the unsecured priority creditors and general unsecured creditors. In some cases, the debtor’s estate assets are insufficient to pay all priority unsecured creditors in full, and the general unsecured creditors receive nothing.

An individual debtor (not partnership/corporation) may claim certain items of property as exempt property and keep those items (subject, however, to any valid liens). The individual debtor is allowed to choose from a Federal list of exemptions. In states where the debtor is allowed to choose between the Federal and state exemptions, the debtor can choose the rules that most fully benefit him or her.

The debtor’s discharge is available in some but not all cases. For example, in a Chapter7 case only an individual debtor (not a corporation/partnership) can receive a discharge.

The discharge also does not eliminate certain rights of a creditor to setoff/offset certain mutual debts owed by the creditor to the debtor.
Not every debt may be discharged. Certain taxes owed to Federal, state or local government, government guaranteed student loans, and child support obligations are not dischargeable. (Guaranteed student loans are potentially dischargeable against the lender).

Bankruptcy laws relating to prosecutable bankruptcy fraud and other bankruptcy crimes are found in Sections151-158 of Title18 of the US Code.

The proceedings of these bankruptcy laws are covered under Title 11 of the United States Bankruptcy Code and are adopted by each bankruptcy court.