Understand the process of bankruptcy before you file the forms by yourself or with an attorney.
To start the process of bankruptcy, a person with an unwieldy amount of debt files for bankruptcy in the nearest court. This process is normally done with the help of attorney, a person is allowed to complete the paperwork and file the petition themselves. Once the petition has been filed, the courts will issue an injunction to stop all collections activities until a meeting of creditors can be held.
Establishing a Repayment plan
At some point following the initial filing of the petition, which takes usually around 14 days, the court is going to establish a meeting where all of the creditors and the debtor are going to get together. All of the parties that believe you owe them money at this point are going to come together all at once in a single court room. Depending on what amount is owed and who the actual creditors are, some or maybe all of the creditors are going to end up making a personal appearance. Some of them may even voice an opposition to your filing for bankruptcy.
You are going to need to pass a means test where it is determined whether or not you are financial able to repay your debts by the court. If you are found to be able to pay your debts off, then the petition for bankruptcy is going to be dismissed and you are going to be told to work with your creditors so that you can establish a good payment plan. If the court ends up determining that you are not able to make the repayment obligations at this point, then the bankruptcy case is going to continue moving forward at this point.
Repayment and Discharge of the Case
After the meeting takes place with all of the creditors, then the court is going to establish your very own payment plan. In this payment plan, as a debtor you are going to be required to pay a portion of your outstanding obligation as the court establishes for you. In a standard Chapter 7 bankruptcy case, the court may actually force a liquidation of whatever non essential assets you have, and the funds generated would then be disbursed to all of the creditors in the form of a repayment. On the other hand, in a chapter 13 case the debtor is generally going to be able to maintain all of his or her belongings, but he or she is required to make fixed payments to the court via garnishment of wages for a fixed period of time that is generally between 3 and 5 years in length. Once these repayment plans have been completed the court is going to issue a discharge for the bankruptcy and then the debts are wiped away from your credit file as a result. The bankruptcy record, however, is going to remain on your file for seven years.
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