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Filing Bankruptcy
There are two major types of bankruptcy filings. Both are discussed in a stepwise manner below
Duration and Cost
The whole Chapter 7 bankruptcy process takes about four to six months, costs $200 in filing and administrative fees without an attorney, and commonly requires only one trip to the courthouse.
Filing Information
To file for bankruptcy, you fill out a two page petition and several other forms. Then you file the petition and forms with the bankruptcy court in your area. Basically, the forms ask you to describe:
- your property
- your current income and its sources
- your current monthly living expenses
- your debts
- property you claim the law allows you to keep through the bankruptcy process (for example most states let you keep clothing, household furnishings, Social Security payments you haven't spent and other basic items)
- property you owned and money you spent during the previous two years, and
- property you sold or gave away during the previous two years.
After Filing Bankruptcy
Filing for bankruptcy puts into effect something called the "automatic stay." The automatic stay immediately stops your creditors from trying to collect what you owe them. So, at least temporarily, creditors cannot legally grab (garnish) your wages, empty your bank account, go after your car, house or other property, or cut off your utility service or welfare benefits.
Until your bankruptcy case ends, your financial problems are in the hands of the bankruptcy court. It assumes legal control of the property you own (except your exempt property, which is yours to keep) and the debts you owe as of the date you file. Nothing can be sold or paid without the court's consent. You have control, however, with a few exceptions, of property and income you acquire after you file for bankruptcy.
Duration For Filing Consecutive Bankruptcys
If, after you file for bankruptcy, you change your mind, you can ask the court to dismiss your case. As a general rule, a court will dismiss a Chapter 7 bankruptcy case as long as the dismissal won't harm the creditors. Usually, you can file again if you want to, although you may have to wait 180 days.
At the end of the bankruptcy process, most of your debts are wiped out (discharged) by the court. You no longer legally owe your creditors. You can't file for Chapter 7 bankruptcy again for another six years from the date of your filing.
What is chapter 13 bankruptcy?
In a Chapter 13 you keep your property but in exchange, you payoff your creditors (sometimes in part and sometimes in full) over 3-5 years. You cannot file Chapter 13 bankruptcy if your unsecured debt exceeds $269,250 or your secured debts are over $807,750.
Information to be filled in chapter 13 bankruptcy
In addition to forms similar to Chapter 7, you also file a plan on how you will repay your debts. You are then required to attend a creditor's meeting as well as a confirmation hearing where the judge accepts or rejects your plan. If accepted you make payments directly to the bankruptcy trustee.
What you gain by filing chapter 13 bankruptcy?
At the end of the 3 or 5 year plan, the remaining unpaid balance on dischargeable debts is wiped out.If you cannot finish your plan (i.e. job loss), the trustee can modify the plan. If it is obvious the problem is not of a short duration, the court may offer a hardship discharge.
Whether you can change your plans?
If the bankruptcy court will not let you modify your plan or offer a hardship discharge, you can convert to a Chapter 7 or you may have your Chapter 13 dismissed. In this latter case, you will owe what you owed before filing Chapter 13 minus any payments made.
Other Useful Links :
Bankruptcy Chapter 7 | Bankruptcy Chapter 13
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