The bankruptcy law allows individuals, who cannot pay their debts anymore, to decrease the amount of debt they have to pay or to prolong the period in which their debts must be paid. Debtors may be forced by their creditors to file for bankruptcy, or they can voluntarily file for bankruptcy. Filing bankruptcy makes sense for many reasons. The common reasons for filing bankruptcy include extremely high amount of debt, late payments, no savings at all, and creditors filing lawsuits, among others.
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According to present legislation in the United States, there are two types of bankruptcies applicable to consumers. Chapter 7 bankruptcy permits debtors to settle their debts immediately by relieving all or part of their debts. Chapter 7 involves selling of debtors' assets to reduce their debts. Filing for Chapter 7 is allowed every eight years after filing Chapter 7 and six years after Chapter 13 filing. Chapter 13 bankruptcy, on the other hand, involves creating a payment plan that enables debtors to repay all or part of their debts.
Planning to voluntarily file for bankruptcy? Here are the steps to properly file for Chapter 7 bankruptcy. First, you have to complete a credit counseling program through a U.S. Trustee's office-listed agency so that the court will accept your petition. The program must be taken within six months before filing for bankruptcy.
Next, you need to know if you qualify for Chapter 7. Individuals who consider filing for Chapter 7 need to pass a "Means Test" to show that their income is lower than their states' median income. The test requires that a debtor has less than $6,000 disposable monthly income over the next five years. You may not be allowed to file for Chapter 7 if you fail the test. Instead, you can file for Chapter 13. You can ask for help from a lawyer to know if you have the chance to qualify for Chapter 7.
If you qualify for Chapter 7, then you can file the Voluntary Petition by filling out Form B1. You can choose the court where you will file your petition, but you can file your petition in only one court. When selecting a court to file the petition, find one that is advantageous to you. You can file in a court nearest your residence or business office. You may also opt to file it where your principal assets are located.
Afterwards, you will be required to pay a filing fee, which is currently at $299. Then you will be asked to file some forms in which you will declare your schedule of assets and debts, which lists your property and your creditors' claims. Consult a lawyer to know which schedules you need to file in court. For every type of property and every type of creditor (i.e., cars, real estate, credit cards), you will have to file separate forms.
The last step for filing Chapter 7 bankruptcy is to attend a pre-trial conference with creditors to settle debt payment plans. You will need to do this before the court hears your petition. You can have a lawyer accompany you at the pre-trial conference.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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