If you have more debt than you can juggle, it is always wise to seek the advice of a bankruptcy attorney. Bankruptcy may not always be the best course of action, but if it is, here is an overview of the process.
Bankruptcy Process Overview
Review Your Options
Meet with an attorney to discuss what your options may be, whether it is to file bankruptcy or not and if so whether a Chapter 7, Chapter 13 or some other chapter is best for you. There are rules about who qualifies for which bankruptcy, some of which are specific to the state in which you live. A few commonly asked and basic rules are as follows:
- You can only file a Chapter 7 Liquidation bankruptcy once ever eight years and the time is counted from filing date to filing date.
- You have to have a regular stream of income to fund a Chapter 13 Debt Consolidation bankruptcy.
- You must list all assets you own at the time of filing.
- You must list all creditors you owe at the time of filing.
- You must complete a credit counseling course prior to filing your case. These are offered on-line and by telephone and the cost is usually $50.00 or less.
Once you decide the type of bankruptcy you will file, you will be required to provide your attorney with documentation of various things like paystubs, bank statements, bills, tax returns, deeds, loan documents, etc. Your attorney will need these items to prepare your bankruptcy schedules and statements that will be filed with the court.
Sign Bankruptcy Statements
You are required to sign your bankruptcy statements and schedules under penalty of perjury that they are true and correct. Once signed, the attorney will file the documents electronically with the court. The moment a bankruptcy case is filed the automatic stay goes into effect. The automatic stay is the legal term that means all collection activities must stop (i.e. garnishments, foreclosures, repossessions, bank levies).
Attend the Meeting of Creditors
About four to six weeks after you file, you are required to attend a meeting of creditors. A person called a Trustee will be appointed by the court to oversee your case. At the meeting of creditors, the Trustee will ask you questions about your case under oath. Your creditors can come ask questions as well. Creditors have a period of time to object to the discharge of a debt or to object to you getting a discharge at all. An attorney can go through the reasons why you might not be able to discharge a certain debt or why you can lose your discharge.
Complete a Bankruptcy Finance Course
You are required to complete a second bankruptcy course called a personal financial management course again offered online or by phone. For a Chapter 7, you must complete it within 45 days after the meeting of creditors. For a Chapter 13, you must complete it before the end of your repayment plan. Approximately four to five months after filing a Chapter 7, you will receive the order from the court discharging the debts. The discharge in a Chapter 13 is issued once all plan payments are completed which is usually anywhere from 36 to 60 months from filing.
If you need financial advice to deal with debt, call one of our offices today for a free, no obligation consultation.
Heather Ellis Banks is an Associate Attorney at the Bond & Botes Law Offices in Knoxville, Tennessee. She holds a Bachelor of Science from the University of Tennessee Knoxville, and a Juris Doctorate from the University of Memphis, Cecil.C. Humphreys School of Law. She has been helping consumers to navigate through the bankruptcy process since 2005. Read her full bio here.