The 5 Stages Of The Bankruptcy Process
Bankruptcy is a process, and you must follow the steps carefully to improve your odds of successfully completing it. A bankruptcy services practice will tell you to prepare for handling the following five stages.
Credit Counseling
The court wants to know that everyone who files for bankruptcy has exhausted all of their possible options. To this end, filers must undergo credit counseling. An agency called the U.S. Trustee Program approves the companies that offer counseling, and you must work with one of these firms. In order to count for filing purposes, you must finish counseling within 180 days before you file.
The counseling fee is around $50, but waivers are available to some people. Likewise, you may be able to set up installment payments.
When you file your eventual petition for relief, you must include a financial plan developed during the counseling process. Notably, this plan doesn't have to be practical or even possible. Also, including it doesn't constitute an agreement on your part. However, the court wants to know that you've tried.
Petition for Relief
A bankruptcy law services firm can assist you with filing a petition for relief. This is the formal request for a judge to hear your case and make a determination. You must lay out your entire financial situation in detail, including both earnings and debts.
Also, your petition must name all of the creditors that you're seeking relief from. If you fail to specify a creditor in the petition, then the court can't grant relief. In other words, any unnamed creditor has the right to keep coming after you for owed debts even if the judge rules in your favor.
Meeting of the Creditors
Your creditors have the right to demand a meeting. Not all creditors do this in all cases, though. If any creditors request a meeting, they have the right to place you under oath and ask questions about your situation. This ensures that the court hears everything in order to protect the creditors' rights and financial interests.
Liquidation or Repayment
Depending on the type of bankruptcy, either the court will liquidate your assets or order you to make a payment plan. Liquidation means that the court sells your non-exempt assets and uses the proceeds to pay part of what you owe to your creditors. This happens only in Chapter 7. In Chapter 13, you'd create a repayment plan and ask the judge to approve it.
Discharge
Upon completion of the process, the court discharges the remaining debts. For all purposes, the debts no longer exist and the case ends.
For more info about bankruptcy law services, contact a local professional.