How to File Bankruptcy
Bankruptcy is the inability of a debtor to pay its creditors that is declared legally. The most common type is ‘Voluntary Bankruptcy’ which the debtor initiates.
Many people may hesitate to file a bankruptcy but it must be noted here it’s the last hope to save the organization. You can also re-establish your credit after filing bankruptcy so does not hesitate to file.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, (“BAPCPA”) has put in many changes in the Bankruptcy code. Under the new law of BAPCPA, the individuals or organization need to acquire “credit counseling” from any U.S Trustee approved entity at least within 180 days of the date when the filing of bankruptcy case is done. In total of six chapters, the most important are chapter 7 (the simplest kind and includes liquidation of individuals or businesses) and chapter 13 (allows the individual to develop a plan to repay his debts).
After gathering knowledge about BAPCPA and decided to initiate a bankruptcy, its time to hire a lawyer. Discuss all the matters about your debts and assets openly with him. Answer all his questions openly. Discuss openly and let him decide which chapter is best for you. According to BAPCPA’s new law, you should take the “mean test”. Also pay your lawyer his full fees before the case is filed as according to chapter 7, the lawyer can’t be a creditor. If the case is filed under chapter 13, then you don’t have to pay the full fees of the lawyer in advance but can be paid according to the accepted plan as discussed in chapter 13.
After this you must refer all your creditors to your lawyer. Also a stay automatically comes into effect. You will receive a mail about meeting with the creditors. You should discuss the case elaborately with your lawyer before the meeting. Another point is using your credit card after the case is filed may lead you to trouble.
Then a process is sorted out to pay the creditors. A creditor can file a lawsuit against you within 60 days of meeting.
Bankruptcy is the last hope for many individuals and organizations. It’s a law to protect you. So don’t hesitate to use it because it’s there to protect you. Study all the information carefully and do consult a lawyer if you decide to file a bankruptcy.