If you find yourself swimming in debt and can’t seem to find a way out you need to realize you’re not alone. This is probably one of the most difficult circumstances you’ve ever been in, and filing bankruptcy is one of the hardest choices you’ll ever make. So let’s make sure you understand exactly what is involved when filing bankruptcy and how it will affect your life. This guide will assist you to understand the process of bankruptcy from behind the scenes.
As you may know bankruptcy and its qualifications have changed dramatically over the last three years. In October 2005 federal law made it more difficult to file Chapter 7 bankruptcy which totally liquidates your obligations in favor of Chapter 13 bankruptcy which is a repayment plan of at least a portion of your debt.
If you’ve made the decision to file bankruptcy you’ll most likely hire an attorney which will charge a fee ranging from $1500-$2500 in advance. This is probably the best route to take since the attorney will bring with them significant experience that you do not have, and I will take much of the burden off your shoulders. You should have your financial matters as organized as possible to assist the attorney can make the process easier. Considering today’s economy, bankruptcy is very common and most bankruptcy attorneys are extremely busy. As a result you should probably not expect from coast to be returned immediately.
The Bankruptcy Process
Once you’ve compiled your entire list of creditors and filled out all required paperwork, the attorney will have your bankruptcy petition filed in your County. When the court accepts your petition your creditors will meet in a meeting that you will attend. During this meeting some of your creditors may object to your bankruptcy petition and may bring you to court demanding the balance of your account.
Meanwhile during this process, it’s a requirement that you received that counseling. Additionally you will be assigned a trustee who will overlook the filings of both creditors and debtors to make sure the proceedings are in compliance with the law.
The entire chapter 7 bankruptcy process usually takes around three months from start to finish, but this also depends on your situation and extensions may be possible. Of course for Chapter 13 bankruptcy and you’ll be paying back some of your debt, but most likely it will be a reduced balance with less interest over a period of 3 to 5 years.
What to Expect?
Wondering what to expect after your bankruptcy is complete? Your bankruptcy will be reflected on your credit file in chapter 7 for up to 10 years. Since Chapter 13 demonstrates more responsibility with repayment, this period is reduced to seven years. It is important to realize that if you file Chapter 7 bankruptcy you won’t be able to file again for at least another eight years. Take note that some items may not be discharged such as child support, student loans, and any taxes (federal, state and local) owed will need to be paid by you.
Filing bankruptcy can be a daunting decision. Think about all the consequences you’ll face, both short term and long term. However, it may be your only viable option, and your wisest option.
