Not only does filing for bankruptcy often carry with it a certain social stigma, but it is a painfully drawn out process as well. Whether an individual or family is looking to liquidate all assets through a Chapter 7 filing, or adjust their debts with a repayment plan via Chapter 13, the road is often a long one, rife with twists and turns. That's why those thinking of going down this path need to know exactly what they're getting into and do their diligence accordingly. Only by adequate preparation can a person or family navigate the bumpy road of bankruptcy with the least amount of headache.
Before anything else is decided, it must be determined whether or not the person or family in question is filing for the right reasons. *Bankruptcy *can be a viable way to wipe out unsecured debt (credit card bills, medical bills, utility bills, etc., etc.), but most of the time it won't eliminate tax debts, liens or repossession of property from a secured creditor.
Now that the basic parameters of bankruptcy have been established, here are some detailed steps to take to ensure the filing goes as smooth as possible.
1. Determine Your Eligibility
It's true: many folks in many states aren't even eligible for bankruptcy. The standard is if the average income six months prior to the filing exceeds the median income of an individual or family of the same size, then the filer may not be eligible.
2. Analyze All Your Debt
As mentioned above, certain debt will not be wiped out through bankruptcy. That's why it's important to take stock of everything owed by the filer. Child support payments, for example, can't be erased, and any debt collateral held by a creditor is liable to be repossessed.
3. Look for Property Exemptions
These will vary state by state, but each one does have exemption laws on the books. In many instances, those filing for bankruptcy are entitled to keep certain types of property and sometimes even the equity on said property.
4. Redeem Your Secured Debts
Those who have pledged property as collateral will need to negotiate with the creditor if they wish to keep said property. Usually this involves making some sort of payment directly to the creditor. During the bankruptcy process, the filer can choose to redeem all property, reaffirm it through negotiating a payment plan with the creditor, or surrender it entirely.
5. File the Forms
Now its time to file the bankruptcy petition, which is the first step to officially starting the case. The filer will then have a court meeting with their trustee and perhaps a few creditors. During these proceedings, it's possible to file any disputes or objections against the creditors' claims.
6. Receive Discharge
Should the meeting prove successful, and the filer presents his form stating how he or she is prepared to handle their secured debts, then the court should issue an order denoting that the debts are officially discharged. He or she now has no legal obligation to pay them.
By adhering to the above steps, the average person or family should be able to successfully discharge their debts. One final tip: those who are considering bankruptcy merely to stop being hassled by creditors should think again. Proportionally, bankruptcy is too serious a step to take to merely to avoid dealing with debt collectors. Besides, those who truly feel a creditor has crossed the line into the realm of harassment have recourse by filing a complaint with the FTC.
Published on behalf of Ms. Briana Cameron. As an experienced blogger, doing several pieces on Barrie bankruptcy and debt management, Briana has been able to share her personal findings on the topic in a straight forward way. Making it easy for the regular family man or woman to understand.