Bankruptcy: What it is, How to File and Process
You must have come across the term – Bankruptcy. One needs to have a complete understanding and what it Bankruptcy and the process to file bankruptcy.
Let’s understand the term in details along with the process to file bankruptcy.
What Is Bankruptcy?
If the individual or entities are unable to pay the debts due to financial crunch, they can choose to file bankruptcy. It is an opportunity for debtors to start fresh. Depending on the individual’s situation, there are different types of bankruptcies – Chapter 7, Chapter 11, and Chapter 13.
When Should You File Bankruptcy?
Make sure you make all the possible effort to resolve the financial crunch before filing bankruptcy. If you find that filing bankruptcy is the only way to your financial situation, it is good to consult with a bankruptcy attorney. Having an attorney for legal matters will ensure the appropriate actions.
The process to File Bankruptcy
Going through the bankruptcy process is not as simple as you may think. You need to understand the filing process in details.
1) Organize Your Financial Records
You need to compile all your financial records that include debts, income, expenses, and assets. Organizing will help you prepare for anything the court asks you to submit.
2) Hire a Lawyer
Judges cannot offer advice. Hiring a lawyer will help you make the right approach and complete the process with ease.
3) Complete Pre-Bankruptcy Credit Counselling Through the United States Courts
The government requires all individuals or entities to complete credit counselling within 180 days before declaring your bankruptcy case. You must approach an agency listed on the United States Courts website. You will receive a certificate of completion after you complete the credit counselling course.
4) File a petition for bankruptcy
When your lawyer file all the necessary paperwork for your proceeding, an automatic stay goes into effect. Filing a petition will ensure that your creditors can’t sue you or increase your wages.
5) A bankruptcy Trustee will be Assigned
After accepting the petition, a bankruptcy trustee arranges a meeting with your creditors or mortgage lenders in MA. This meeting allows your creditors and the trustee to ask questions about your case. After reviewing your paperwork, the trustee will determine if you qualify for filing bankruptcy.
6) Non-exempt property handling
In the case of Chapter 7 filing, the trustee will determine if there is a need to sell your non-exempt property to pay creditors. The property can include jewellery, appliances, cars, or your home as long as it exceeds the exemption limit.
7) Returning the secured debts to creditors
If you have any secured debt, you will need to return the items to the creditors. You can also redeem the collateral by paying as per its value.
8) Complete a debtor education course
You need to complete a debtor education course from an eligible credit counselling agency before discharging your case.
9) Receive discharge on qualifying debts
It takes 3 to 6 months to discharge your debts after filing your bankruptcy. Receiving discharge means you do not have to pay any debts.
Bankruptcy is an offering, not a punishment. The process might be effort full. However, it allows you to start fresh with a clear history. We, at Drew Mortgage Associates, guide our clients whenever they need our assistance.