Got Yourself Bankrupt Did You

By declaring yourself bankrupt you can wipe away your debts and rebuild your financial position. Firstly, you have to decide which type of bankruptcy you are going to file under, the two most common being chapter 7 and chapter 13. Chapter 7 is often seen as the preferred option, but under the new BAPCPA rules, all applicants for bankruptcy have to undergo a means test, the result of which often forces individuals into chapter 13.

Declaring Yourself Bankrupt – What You Should Do

With the passing of the boom years and the entry into more recessive times, many people are finding life financially impossible – crushed by the wieght of debt taken on in the good years. No amount of loyalty to any financial institution has vlaue any more – they simply want their money. By declaring yourself bankrupt you can wipe away your debts and rebuild your financial position.

It is vital however, that you treat bankruptcy as an absolute last resort and examine every possible means of avoiding it. Indeed, under the Bankruptcy Abuse Prevention anhd Consumer Protection Act 2005, any individual must undergo proper consumer credit counselling before 180 days have passed since filing.

Having attended councelling, if bankruptcy is considered to be the only option, the following steps have to be taken:

Firstly, you have to decide which type of bankruptcy you are going to file under, the two most common being chapter 7 and chapter 13. Chapter 7 is often seen as the preferred option, but under the new BAPCPA rules, all applicants for bankruptcy have to undergo a means test, the result of which often forces individuals into chapter 13.

The second thing to consider is legal representation. Ironically, declaring yourself bankrupt is not an area where you want to save money. Lawyers are not cheap, but it is highly recommended that you hire one, and make sure they are aware of the laws in your state.

Thirdly, once you have decided to file, do not use your credit cards. This is because your case could be revoked if you have willingly taken on debt that you know you cannot afford to repay.

“Automatic stay” is triggered when your lawyer files your bankruptcy case. Creditors then have to approach your lawyer direct regarding any debt, thus taking the pressure off yourself.

Shortly after filing, you will be notified by mail (usually) of a “341 meeting”. This is from section 341 of the bancruptcy code and is also called a creditors meeting. Here you submit details of income and expenditure, as well as a list of creditors. You are then asked a series of questions under oath, so that the court is satisfied that you are indeed in the precarious financial situation you claim.

The trustee then arranges liquidation of your assets with the proceeds used to pay off as much debt as possible. Once this has been done you are no longer liable for any debt left over. Approximately 60 days later you will receive notice of discharge. This is the case for a chapter 7 bankruptcy.

Chapter 7 and chapter 13 are different in that chapter 13 is a repayment plan. Creditors are repayed over 3 – 5 years (amounts and time are determined by the BAPCPA means test), and discharge notified some 60 days after the last payment has been met.

For more free informatiabout about bankruptcy go to www.declaringyourselfbankrupt.org where you will find a load of useful informatiabout and tips about declaring yourself bankrupt.

Filed under Debt Consolidation by Bob Tremerituus