Declaring Personal Bankruptcy With Chapter 7: The Process Revealed
Understanding Personal Bankruptcy
Once you have met with your bankruptcy attorney and made the decision to declare personal bankruptcy, it is important for you to understand the process thoroughly. If you are looking for a step-by-step guide through chapter 7 bankruptcy, you have come to the right place. We can help you understand what will occur throughout this process.
Step-by-Step Process When You Declare Personal Bankruptcy
- Credit Counseling- Ever since the changes in the personal bankruptcy code, those who wish to declare personal bankruptcy must first undergo credit counseling courses. These courses must be approved by the government, and a certificate of completion must be presented to the court afterwards. During these courses, a credit counseling will help you determine whether bankruptcy is your best option, or if you could benefit from debt negotiation or other alternatives to personal bankruptcy.
- Automatic Stay- Once you have decided to declare personal bankruptcy and gone through your credit counseling courses, an automatic stay will be placed in effect by the court. This prevents your creditors from contacting you for collection while your bankruptcy is underway.
- Meeting of The Creditors- This meeting is required for all bankruptcy cases. During this time, you will meet with all of your creditors and swear under oath that all of the information in your bankruptcy petition is correct.
- Liquidation- If the trustee of your bankruptcy case determines you have non-exempt assets, he or she will seize and sell those assets at this time. The money gained from the sales will be used to pay back your creditors.
- Reaffirmation of Debts- If you want to keep your second car or other non-exempt debt you still owe money on, you can reaffirm those debts at this time. This means you will agree to keep making payments to your lender so your assets can not be sold by the trustee.
- Debtor Education- Before your bankruptcy case can be completed, you must first take part in debtor education courses. These courses are designed to help you gain a fresh start after you declare personal bankruptcy. Tips on how to save money, handle your credit, and manage money will be included in these courses.
- Discharge- A bankruptcy discharge is the final goal. At this time, your bankruptcy case will be completed and you will no longer have to worry about paying off your discharged debts. Make sure you understand what debts have been discharged and which have not though. Some debt, like taxes, student loans, and child support, may not be dischargeable through bankruptcy.
- Dismissal- A dismissal is not the same as a discharge. If your bankruptcy case is dismissed, your bankruptcy is over, but you will still owe your debts and will no longer be protected by the automatic stay. A dismissal can occur for a variety of reasons, such as mistakes on your petition, fraudulent behavior, or an inability to qualify for chapter 7 bankruptcy.
You will be unable to declare personal bankruptcy for another six to eight years, so make sure you consider your decision to declare personal bankruptcy to be a long-term helping hand, instead of a short-term fix.
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