to a Fresh Start After Bankruptcy
Bankruptcy is one option to consider in order giving yourself a “fresh
start,” when you have more debts than you have assets. There are in
fact many types of bankruptcy provided under the law but the most
common is Chapter 7 bankruptcy, which is also known as liquidation.
When filing under Chapter 7 bankruptcy, all your assets, excluding
those that are exempt under the law of your state, are dissolved and
liquidated. Generally, the person tasked to do this is the
court-appointed official, called a trustee.
All in all, the vital task of the trustee is selling your properties
and using the proceeds to pay your creditors. After doing such, the
court will then cancel many of your remaining debts, thus affording you
a “fresh start” to life.
Here is a step-by-step guide to filing a bankruptcy under Chapter 7
Step 1: Decide whether you should
file bankruptcy or not.
Filing bankruptcy is a personal decision, influenced by many factors,
such as the amount of serious debts and your ability to meet the
original payments or pay the full amount. For starters, when you are
broke, it is never a nice experience getting harassed by creditors for
debts incurred. For another, your decision to file should not be made
for the sole purpose of putting a stop to your demanding creditors.
This is a significant point as secured creditors may apply for “relief
from stay,” thus allowing them to continue their efforts to repossess
or foreclose even though you already filed for bankruptcy.
Step 2: Get an attorney
While the law on Chapter 7 bankruptcy does not need individual
consumers to hire an attorney who would represent them in court, it is
still advisable to ask for legal help, particularly concerning critical
decisions involved in bankruptcy.
Step 3: Comply with the legal
File your petition with the bankruptcy court serving in your area. If
you are a business debtor, then file with the bankruptcy court in the
place where the business was organized or has its principal place of
business or principal assets. Your attorney should be able to advise
you on how to deal with these required legal forms.
Step 4: Pay the necessary fees.
As with any other court cases, there are certain fees required, such as:
• Case filing fee
• Miscellaneous administrative fee
• Trustee surcharge
Upon filing, you are usually asked to pay these fees to the clerk of
Note that the number of installments is limited only to four.
Additionally to that, you are also required to make the final
installment no later than 120 days after filing the petition.
Step 5: Notice to the creditors and
After filing your petition for bankruptcy under Chapter 7, paying the
necessary fees, and complying with the legal requirements, an
“automatic stay” is granted to you by operation of law. This stay will
efficiently stop most collection actions against you and your
properties. This means that as long as the stay is in effect, creditors
cannot initiate or continue lawsuits, wage garnishments, or even
telephone calls demanding payments.
After the bankruptcy case has been filed, the bankruptcy clerk will
give notice to all creditors whose names and addresses you provided.
Then, the case trustee will hold a meeting of creditors between 20 and
40 days after you filed your petition.
Step 6: Cooperate with the trustee.
The case trustee has a vital role in a bankruptcy case. His primary
responsibility is to liquidate your nonexempt assets in a manner that
maximizes the return to your unsecured creditors. He does this by
selling your property, if it is free and clear of liens and as long as
it is not exempt, or if it worth more than any security interest or
lien attached to the property and any exemption that the debtor holds
in the property.
In view of the broadness of a trustee’s power, it is significant
therefore that you cooperate with the trustee. Provide any financial
records or documents that the trustee requests and answer questions,
which the trustee is necessary to ask at the meeting of creditors under
the Bankruptcy Code.
Step 7: After the discharge…
If all goes well with your Chapter 7 bankruptcy case – that is, no one
files a complaint objecting to the discharge or a motion to extend the
time to object – the bankruptcy court will issue a discharge order
relatively early in the case, about 60 to 90 days after the date first
set for the meeting of creditors
A discharge order is an order issued by the bankruptcy court, releasing
you from personal liability for most debts and preventing your
creditors from taking any collection actions against you. As a rule,
excluding cases that are dismissed or converted, individual debtors
receive a discharge in more than 99 percent of Chapter 7 bankruptcy
For someone filing under Chapter 7 bankruptcy, a discharge of almost
all of your debts is the ultimate goal. With the release of all your
debts and creditors stopped from pursuing any further collection
actions against you, the opportunity for a fresh start is apparent.
Article Source: http://www.articlesbase.com/debt-consolidation-articles/
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