Credit Facts

Filing for bankruptcy is the last option anyone wants to take. Filing for bankrupcy can cause you to forfeit your ability to have any access to credit. For some, filing for bankruptcy is the only solution to your credit debt. Here is information on how to file for bankrupcy.

First of all use filing for bankruptcy as a very last resort. Prior to filing a bankruptcy, an individual must obtain some consumer credit counselling. Such credit counselling is intended to provide an individual with alternatives in filing a bankruptcy.

When considering how to file bankruptcy, consider the two most common bankruptcy types. The most popular is the chapter 7 (which is a straight or liquidation bankruptcy), and there is also the chapter 13 bankrupcy (which is a repayment plan for individuals). BAPCPA has made chapter 7 to be more difficult to file, because of the means test. Many individuals will be forced to file a chapter 13 case because of this test.

Research your options as it relates to filing for bankrupcy. Some people choose to file bankrupcy without the aid of an attorney. It's highly recommended, though,to hire a bankrupcy attorney. Your research should help you decide on a bankrupcy lawyer. In most cases, people who choose large firms to represent them filing a bankrupcy will work with a paralegal and not the lawyer. Try to find a firm in which you have direct contact with your bankrupcy lawyer. Meet with the bankrupcy lawyer you've selected and go over an review the facts pertaining to your bankrupcy case. Your bankrupcy lawyer should be asking and answering all of your questions. They will determine which chapter bankruptcy is best for you, based on your financial affairs. A bankrupcy lawyer will also assist you with completing the BAPCPA's means test. The fees for filing bankrupcy are varied. Some lawyers will charge a flat fee, while others will charge based upon the amount of debt that you have. Some bankrupcy lawyers will require that you pay up front before they file a bankrupcy. Refer all creditors to your lawyer's office, once he or she has been retained.

Wait for a meeting of all of your creditors. Once your bankrupcy lawyer has submitted your petition, you will be notified by mail with your date for a meeting of creditors (or a "341 meeting," named after the section of the Bankruptcy Code requiring it). This will allow the trustee to ensure that you have given truthful answers on your bankruptcy petition, and that you understood and agreed to filing for bankruptcy. Your bankrupcy lawyer should have met with you prior to this meeting to go over all of your debt to ensure that it is all listed. You must also list all of your assets. He or she will also go over sample questions that will be asked at the meeting when filing for bankrupcy. Prior to the meeting, you should have reviewed your file with your bankrupcy lawyer. Once you are sworn in at the meeting, you will answer all questions that will be recorded.

When filing a bankruptcy case, do not use your credit cards. If you do so with the intent to file for bankrupcy, a creditor can challenge the discharge of the debt owed or even your right to discharge any debt. If you obtained the debt knowing that you could not repay it, you may not be able to discharge that debt if the creditor challenges it through a lawsuit, or adversary proceeding, in your bankruptcy case.

In a chapter 7 bankruptcy case, the trustee will determine whether or not there are assets that can be liquidated and used to repay your creditors. If the trustee determines that all your assets are exempt, a report of no distribution will be filed with the bankruptcy court. If the trustee determines that there are non-exempt assets, they will be sold and payments may be made to your creditors. In a chapter 7 bankrupcy case, you may never have to pay a creditor back. In a chapter 13 bankruptcy, you will be required to enter into a 3 to 5 year plan, in which you will pay creditors as much as you can over time, taking into consideration the BAPCPA means test.

60 days after your meeting of creditors is first set is the deadline for creditors to file lawsuits to challenge the discharge of a particular debt or your entire discharge. If no such lawsuits are filed, shortly after that 60th day you will receive notification of a discharge of debt if you filed chapter 7 bankruptcy. A discharges means that you have no further obligation to repay the discharged debt, the existence of that discharged debt may still appear in your credit reports though, and that your creditors can never collect the debt from you.

If you filed a chapter 13 bankruptcy, you will receive the notice of discharge approximately 30 to 60 days after your final payment has been made and the trustee ensures your payment plan while filing for bankrupcy has been followed and completed.