An Introductory Guide to Bankruptcy
Most of us don’t really think about bankruptcy until the debt starts to creep in, and even then, bankruptcy may not immediately seem like the right choice. While it’s never wise to jump into bankruptcy without first exploring alternatives, it can be an effective tool for a fresh financial start. It pays to research and familiarize yourself with how bankruptcy works and how it can benefit you.
Who is involved?
There are several key individuals who are part of the bankruptcy process. The person who is in debt and must declare bankruptcy is called the debtor, and those to whom money is owed are creditors. These could be individuals, banks, medical companies or collection agencies to name a few. A professional bankruptcy attorney can guide you through the process and ensure that your case is resolved without any problems. After your attorney helps you with your paperwork and files your case, everything will be reviewed by a court-appointed trustee. You will meet with them at your 341 meeting, where they will review the information you have provided and mediate between you and any of your creditors who attend. The custodian is responsible for investigating potential fraud and resolving your case in a timely manner.
Your to-do list
First, I always suggest reviewing your situation to decide if bankruptcy is really the best option for you or if you can make some changes to get your budget back on track. If it’s time to file for bankruptcy, finding a bankruptcy attorney who can help you is your best bet, as they can provide you with a list of the documents you need to provide and worksheets to guide you. , while filling out your paperwork. Before you file, you’ll need to complete an online credit counseling course where you’ll learn more about bankruptcy and have the opportunity to assess your budget. Once you receive your certificate of completion and the necessary documentation, you or your bankruptcy attorney can go ahead and file your case, which starts the automatic stay. This is a legal rule that prevents creditors from contacting you to collect a debt; if they contact you all you have to do is give them your case number and my contact information. Your next step will be to attend your 341 meeting, which some attorneys will attend with you, followed by a final online credit counseling course. If you’re filing Chapter 7, your unsecured debts will soon be discharged, and if you’re filing Chapter 13, you’ll soon begin your reduced payment plan. Your attorney can help you throughout the process so you always know what to expect next.
Take control of the future
It’s easy to feel overwhelmed or even paralyzed if you’re in debt and have no way of paying it off. It can be difficult to know what to do or where to turn, but bankruptcy can give you the peace of mind you need. Then you’ll be able to focus on rebuilding your credit and planning for your future without debt hanging over your head.
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