If you’re considering bankruptcy, you’re probably wondering what to expect once the process begins. Here, our team covers the basic steps most Chapter 7 and Chapter 13 bankruptcy cases will follow. For personalized guidance, it’s always best to consult with an experienced bankruptcy attorney.
When you meet with our team, we begin by helping you explore the best options for debt relief. Bankruptcy is a powerful financial tool, but it isn’t right for every situation, and we’ll conduct a detailed evaluation of your current finances to determine the best course of action. This thorough scrutiny allows for an understanding of the depth of the financial issues, helping to identify the severity of the financial distress.
Your bankruptcy attorney will need documentation of your finances to form a complete picture of your current financial situation. This may include bank statements, tax returns, pay stubs, bills, and more. These documents provide a detailed picture of your financial standing.
After reviewing your financial records, your lawyer will help you decide which type of bankruptcy filing best suits your situation. The options for individuals are usually Chapter 7, which involves liquidation of assets, or Chapter 13, which involves establishing a repayment plan. There are potential advantages and disadvantages to each filing type, and your lawyer can help you understand these options.
All bankruptcy filers must complete a mandatory pre-bankruptcy counseling course. This program is intended to provide valuable education on budgeting, money management, debt repayment strategies, and other crucial aspects of personal finances. The course aims to empower individuals to regain control of their financial situation and take the first steps toward a brighter future.
Once the appropriate forms required by the court are filed, including the petition, schedules, and statements, they not only provide the court with a comprehensive overview of your financial situation but also trigger an important legal protection called the automatic stay.
The automatic stay is a powerful provision that goes into effect immediately upon filing for bankruptcy. It halts most collection actions against you, including foreclosure, wage garnishment, and creditor harassment. This stay gives you a breathing space and allows you to focus on the bankruptcy process while seeking a fresh start.
For Chapter 7 bankruptcy, the next step will be liquidation of assets, if necessary. It is important to note that while the liquidation of non-exempt assets is a possibility, most individuals who file for Chapter 7 bankruptcy will not be required to sell or liquidate their assets. The bankruptcy code provides exemptions that protect certain types and amounts of property from being included in the bankruptcy estate. These exemptions may include items such as a primary residence, a vehicle, household goods, and personal belongings. These exemptions often allow individuals to retain their essential assets while still seeking debt relief through Chapter 7 bankruptcy.
For those filing under Chapter 13 bankruptcy, instead of liquidating assets, a repayment plan is established. This plan allows individuals to pay off their debts over time, typically spanning three to five years. The repayment plan is based on the individual’s income, expenses, and the amount of debt owed. It enables the filer to make manageable monthly payments while still working towards becoming debt-free. If you have assets that would be subject to liquidation under Chapter 7, filing Chapter 13 may be a better option in some cases.
It is important to consult with a bankruptcy attorney to understand the specific rules and exemptions that apply in your jurisdiction and to determine the best course of action based on your individual circumstances.
While most of the bankruptcy process occurs outside of court, you will be required to appear in court for a mandatory meeting with creditors. This meeting serves as an opportunity for creditors to inquire about your financial circumstances and gain insight into your bankruptcy plan. It is not common for creditors to attend these hearings unless they wish to challenge your bankruptcy filing or repayment plan, which is rare.
Completion of an approved debtor education course is mandatory before the bankruptcy can be finalized. This course provides valuable information on effectively managing finances post-bankruptcy. The course can be conveniently taken online, allowing you to access the necessary information from the comfort of your own home.
When all the necessary steps have been completed, your remaining debts will be discharged or removed from your record. For Chapter 7 bankruptcy, discharge occurs after the trustee reviews and approves your bankruptcy filing. For Chapter 13 filings, discharge occurs after the repayment plan has been completed.
Building and maintaining positive financial habits after a bankruptcy can be crucial to creating a more stable economic future. To help encourage this, Wright Family Law Group offers an annual financial review for individuals who have completed the bankruptcy process. Through this program, individuals can schedule an in-person consultation focusing on their distinct post-bankruptcy financial circumstances. The review encompasses guidance on budgeting and provides answers to any lingering questions, fostering clarity and understanding. Our ultimate goal is to ensure that your life after bankruptcy is not only manageable but prosperous.
Navigating bankruptcy can be a complex process, but Wright Family Law Group can guide you every step of the way. Whether considering filing for Chapter 7 or Chapter 13 bankruptcy, our team is ready to assist. With our help, the path to financial recovery can become clearer and more manageable. Contact us today for a consultation.