Bankruptcy

No matter how careful you are about money, an unexpected event like a death in the family or a serious medical problem can cause a financial crisis. When you have more bills than income, the debt keeps mounting and there seems to be no end in sight, don’t get stressed out. Bankruptcy protections exist to help people exactly like you, people who have good intentions but have gotten into a situation that they can’t get out of alone because of negative life experiences.

What is Bankruptcy?
Bankruptcy is a legal process in which you pay off some of your debts and discharge the rest. After discharge, you are no longer held liable for any remaining debt. This process is designed for people suffering extreme financial stress to get rid of their debt and start again. However, it is not a “get out of debt free” card. You must follow legal requirements, including attending mandatory financial education classes, as well as file all paperwork in a timely manner and accept the consequences of filing bankruptcy such as a negative credit rating and the potential loss of assets.

There are two types of personal bankruptcy.

• Chapter 7 bankruptcy requires you to liquidate some of your assets to pay off debt.
• Chapter 13 requires you to enter a structured repayment plan. You must make monthly payments for three to five years to pay off some of your debts. At the end of the plan period, any remaining debt is discharged.

The type of bankruptcy you should file depends on your income level, situation and needs. Chapter 7 is meant for lower-income debtors; you must pass a means test demonstrating that your net income after deducting necessary expenses falls below the median income for your geographical area. Chapter 13 requires that you have a steady source of income so that you can make monthly payments.

Basic Bankruptcy Requirements
Your attorney can provide you with specific requirements for your case. In general, bankruptcy requires:

• Completion of mandatory financial education and credit counseling.
• Provide reports of your income and assets, necessary expenses and debts
• Attend a mandatory meeting with your creditors to answer questions or objections
• Complete a bankruptcy petition and pay the filing fee.

Contact an Attorney Immediately
Although current bankruptcy law says you can file for bankruptcy pro se, which is a legal term meaning you can represent yourself, it’s best to contact an attorney. Bankruptcy attorneys are knowledgeable about all the requirements for filing and can check over your application for completeness and accuracy as well as represent you at your required meeting with creditors or other required meetings.

If you don’t consult an attorney, you run the risk of making a mistake that causes the court to dismiss your bankruptcy case. If this happens, you may not be able to refile or may lose your automatic stay if you do. Contact us if you need an attorney.