Bankruptcy is a legal proceeding involving persons or any businesses that are unable to pay off outstanding debts. Debtors or creditors begin the bankruptcy process with a petition filing. The assets or the valuable things of the debtors are calculated and evaluated; these valuable things are used to repay the outstanding debts. Bankruptcy provides a person or business an opportunity to begin fresh by forgiving debts by repaying the debts with the assets.
People should consider some steps for preparing themselves and their family before they file bankruptcy. Remember, these things are essential as individuals are going to damage their credit rating for years. There are some basic things people should consider before they damage their credit rating. People often search online and offline for getting information about the basic steps from paperwork or official procedure to discharge. Various Creditors and Credit card companies do not help the debtor during bankruptcy filings. They just want their money back. Here are essential steps of how to file bankruptcy.
1. A person should choose the best category of bankruptcy. Chapter 7 and Chapter 13 are the two most common bankruptcy types. In Chapter 7, people can relieve debt completely by liquidating all assets. Some property can be rescued during proceedings with the help of professional in bankruptcy. Chapter 13 bankruptcy places all outstanding debts on the repayment plan. Debtors will have to record or make a list of all bills accurately.
2. The best option is to look for the professional help before filing the paperwork. People should have to meet with the bankruptcy lawyer. They should have to file the official procedure, meetings with creditors, deadlines and repayment option with the advice of a professional. Attorneys are trained to handle this process.
3. The discharge of bankruptcy will remain on the report of credit up to ten years. This will lower the credit scores of individuals; hence they have to make sure that bankruptcy is only the option. Damaged credit score due to no payments or late payments may not be damaged considerably by the discharge.
4. During the first meeting with the bankruptcy lawyer, the debtor will take a means test. A means test will be informed to the attorney for the crucial judgment concerning whether the Chapter 7 claim is acceptable.
5. People should have to pay all the relevant fees of filing bankruptcy. Its fees are different from state to state. Legal fees and court filing fees are also all allowed by some lawyers. The individual or debtor has to pay all legal fees before the bankruptcy proceedings.
6. The one of the huge benefits is that debtors will get the “automatic stay” by filing bankruptcy with the help of an attorney.
7. Once the creditors or credit card companies have met and a waiting period of the sixty day for challenges from companies or creditors has passed, the bankruptcy would be discharged.
Debtors should have to select a lawyer to get the full information about the bankruptcy process, if they want to know about the steps of filing bankruptcy.