How To File Personal Bankruptcy

How to file personal bankruptcy proceedings? That is an inquiry many people suffering from the negative effects of the global economic downturn have been forced to consider.

Bankruptcy is an option more people are considering as jobs are lost and consumers find it harder to keep up with payments on personal debts and mortgages. This article will explain how the bankruptcy process works, including how to know if you are eligible to file under Chapter 7 or Chapter 13 and what differences this makes.

Steps to Filing for Bankruptcy

All bankruptcies will go through roughly the same steps:

• First you will need to gather up all your relevant financial documents to give yourself, your attorney, and the bankruptcy court a clear understanding of where you currently stand on debt and income issues.
• Documents you need to gather include credit reports, bank statements, documents relating to any other loans, and titles or deeds for any property you own. This last point is especially important if you want to exempt certain property from liquidation.
• If you plan to use a bankruptcy attorney to guide you through the process, enlist one early on and make sure he verifies that you have all the necessary documents to proceed.
• If you leave any loans out of your bankruptcy petition, it will mean those debts won’t be discharged and you’ll still be liable to pay them off. Be meticulous and detail-oriented when gathering paperwork and records.
• You should also consult with your lawyer about your options for exempting certain property from liquidation. These laws vary from state to state.
• The next step is to fill out the necessary court documents. If you are planning to liquidate your assets and clear all your debt, you should be filing under Chapter 7. If you are hoping to save your home from foreclosure and eventually pay off your debts, you should file for reorganization under Chapter 13.
• Keep in mind that certain types of debt, such as spousal or child support payments and student loans, will not be discharged by bankruptcy.
• You will have to pay a bankruptcy filing fee.
• In the majority of cases, creditors are not legally allowed to contact you or attempt to claim property after you have filed. This is known as an Automatic Stay.
• Around 30 days after filing the bankruptcy petition with the court, a meeting may be held between you and your creditors. This is a chance to negotiate any points of disagreement.

Recent Changes Regarding Chapter 7 Bankruptcy Filings

Bankruptcy laws were altered significantly in 2005 in an attempt to curb the number of Chapter 7 filings. In order to file under Chapter 7 your monthly income must be less than the median income in your state, or if it exceeds the median income you must demonstrate that you have less than $100 per month free income to dedicate to loan repayments.