The Plunge
Financially positioning one’s self to take the plunge into cold bankruptcy water is grueling, but the actual process of “Filing for Bankruptcy” is even more of a painful endeavor. But, this is no need to get discouraged. Knowing exactly what to do and how to do it will grant advantage on the side of any soon-to-be bankrupt individual. Before vantage is gained though, one must research, become familiar with, and despite the depressing financial scenario, start spirited initiative to become fully active in one’s bankruptcy situation.
A Fresh Start
Making sure one has no other financial alternatives to turn to, such as options like Mortgage Refinancing, Credit Card Debt Elimination, or a small business cash advance is wise before fully committing to bankruptcy filing. For once bankruptcy is initiated; one’s history of this filing will remain on credit file upward to 10 years. Yet, simultaneously, and to one’s benefit, bankruptcy is also a means to start fresh financially, to re-establish credit.
Assuming one has pilfered through alternatives and more debt exists than actual income, there a few actions that much is taken into consideration.
Prerequisite Action
Through the “BAPCPA” or Bankruptcy Abuse Prevention and Consumer Protection Act an individual must consult some form of consumer credit counseling -which is intended to provide individuals with other recourses than actual bankruptcy- with approval through the U.S. Trustee within 180 days of the bankruptcy filing date.
Consider the Options
Bankruptcy Types
There are two types of typical bankruptcy one can file for, Chapter 7 and Chapter 13. Chapter 7, as the preferred type, is a straight or liquidation style bankruptcy while Chapter 13 is a repayment plan bankruptcy. Currently, through the BAPCPA, filing a Chapter 7 is more problematic due to scoring rates on the required means test, which is why most individuals have to or are forced to file a Chapter 13.
Also, specific differences, exceptions and special scenarios will attach to each bankruptcy type, considerably. So, see where one fits and go from there.
Lawyer Inclusion, Costs and Responsibilities
While most will choose to have a lawyer present and assist in the bankruptcy filing process, some don’t. Yet, it is highly suggested that all individuals consult and utilize a lawyer. Try to aim for a law firm that will allot direct contact with one’s lawyer, mainly to allow questions answering by him/her and to make the case accessible when needed.
Shop around for a lawyer. Fees will vary in amount and often switch between flat fees and percentile charges weighted by clients’ debt. And also, depending on one’s location in the U.S., fees will differ. Typical fee amount though is around $1,700. Payment varies too, as some lawyers require money upfront and others prefer installments.
Once a lawyer has been claimed, one can refer all creditors to him or her. Referring over creditors allows a lawyer to speak on a client’s behalf, making certain to be autonomous in the case, as to abide to laws involved. Now, if calls persist directly and solely to a client at home after filing a case and beginning the “automatic stay,” this is a liability issue for creditors whereupon punitive damages can be given to the debtor.
Meet With Creditors
After a debtor’s lawyer submits a petition, one will be given a date on which to meet with creditors for a formal meeting which is called a ‘341 meeting.’ The point of this meeting is to ensure the appointed trustee -sent from the U.S. Trustee Program- that one is truthful concerning their bankruptcy petition and understanding, but more so willing to file bankruptcy.
Planning for this prior to the actual meeting with one’s lawyer is expected; he or she should ask their client sample questions that will come up during the 341 meeting as well as notify their client that all their debt and assets are listed and ready for review come the meeting’s date.
