9 Simple Steps On How To File Bankruptcy

A bankruptcy is the last option any businessman wants to take.
They can cause a big dent on their credit rating and deeply ruin
their reputation. But sometimes filing for bankruptcy is the
only solution to get a person out of dire straits. Here are the
nine steps to be followed in filing a bankruptcy:

1. See to it that there is no other solution that you can do to
avoid filing for bankruptcy. Bankruptcy allows for a fresh
start. Under the Bankruptcy Abuse Prevention and Consumer
Protection Act (BAPCPA), which significantly amended the U.S.
Bankruptcy Code effective October 17, 2005, prior to filing a
bankruptcy case, an individual must obtain some consumer credit
counselling from an entity approved by the U.S. Trustee within
180 days of the date of the filing of a bankruptcy case. Such
counselling is intended to provide an individual with
alternatives in filing a bankruptcy case.

2. Consider the two common bankruptcy types. The most popular is
the chapter 7 (which is a straight or liquidation bankruptcy),
and there is also the chapter 13 (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.

3. Research your options as it relates to filing. Some people
choose to file without the aid of a lawyer. But it's highly
recommended to hire a lawyer. Your research should help you
decide on a lawyer. In most cases, people who choose large firms
to represent them will work with a paralegal and not the lawyer.
Try to find a firm in which you have direct contact with your
lawyer.

4. Meet with the lawyer you've selected and go over your case.
Your lawyer should be asking and answering all of your
questions. They will determine which chapter is best for you,
based on your financial affairs. A lawyer will also assist you
with completing the BAPCPA's means test.

5. Find out how much it will cost. The fees for filing are
varied. Some lawyers will charge a flat fee, while others will
charge based upon the amount of debt that you have. Some lawyers
will require that you pay up front before they file. Refer all
creditors to your lawyer's office, once he or she has been
retained.

6. Wait for a meeting of creditors. Once your 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 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. Prior to the
meeting, you should have reviewed your file with your lawyer.
Once you are sworn in at the meeting, you will answer questions
that are recorded.

7. In filing a bankruptcy case, do not use your credit cards. If
you do so with the intent to file, 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.

8. In a chapter 7 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 case, you may never have to pay a
creditor back. In a chapter 13, 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.

9. The 60th day after your meeting of creditors is first set and
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. 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 case, 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 has been
followed and completed.