The Last Resort-Bankruptcy

Okay, so there’s no quick and easy bankruptcy, but keeping that in mind, there are a set of standard procedures and processes that must be followed in order to make it through the process and come out as good as possible on the other side.

First, you must determine which type of bankruptcy you will be filing. For individuals there are two types of bankruptcy from which to choose. There is Chapter 7 bankruptcy which is more of a liquidation type of bankruptcy and Chapter 13, which is generally more of a rehabilitation type of bankruptcy. But how do these types of bankruptcy affect real life?

Chapter 7 bankruptcy may be appropriate for someone who has car or house payments that have been kept current but has little equity in these assets. If you find yourself using your entire paycheck to make payments on debts, you may do well with Chapter 7 bankruptcy.

With Chapter 7 bankruptcy a debtor is given a chance to start over and not have to repay particular types of loans, like signature loans or credit card debt, while keeping most or even all of their property

For those with a lot of equity in a house, for example, Chapter 13 bankruptcy may be more appropriate because this greater equity can be protected with exemption not provided for real estate in Chapter 7.

You will have to file also with a credit counseling service. For all bankruptcy cases filed after October 17, 2005, the debtor must acquire a certificate from a credit counseling agency that is approved, before the debtor can file a bankruptcy case.

You will also have to file schedules, petitions and statements of financial affairs with the court that handles your bankruptcy case. This will include all your paper bills and bank account statements.

You will also be required to meet with the trustee in you case, generally within 30 to 40 days after the case is filed. He or she will conduct a brief (usually 15-20 minutes) meeting where the trustee will determine if you have any property that is not exempt. If you do, he or she will sell the property and pay the proceeds to the creditor.

The last steps to getting through bankruptcy are financial management training and finally, discharge. The official classes only take about two hours and must be completed within 45 days after the day you meet with the trustee. When you are discharged from bankruptcy you will be able to qualify for most credit that you could before you filed.

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