Bankruptcy is a legal process where the debts of the filers are discharged, which allows for a fresh financial start. If you file under Chapter 7 bankruptcy, the trustee may liquidate your non-exempt assets to pay off the creditors. Before you file bankruptcy, make sure you consult with an experienced bankruptcy attorney to discuss your options and to file a petition with the bankruptcy court.
A Sneak Peek at Chapter 7 Bankruptcy
You need to file a petition with the bankruptcy court when you want to eliminate your financial debts under Chapter 7 bankruptcy. In addition, you’ll need to list all of your assets as well as your liabilities on the form and submit it with other financial documents, which your attorney can complete for you based on the information you provide to him/her.
Your attorney will also make sure that the creditors are listed in the schedule along with correct mailing addresses. You’ll also need to list the debts that are non-dischargeable. If you fail to list your property in the schedule, then your petition can be rejected by the bankruptcy court. Generally, the schedules are filed with the bankruptcy trustee in the district where you reside.
The court appointed trustee provides notice to all the creditors, and the court may place automatic stay once you file petition. This will prevent the creditors from any further collection activities.
Meeting with the Creditors
The filers and their attorneys are required to appear at the meeting with the creditors and the trustee may inquire about their assets and liabilities. In this meeting, the creditors can also question the debtors on this subject.
If there are any assets that are not exempted, then the trustee regains control over the assets. These assets are liquidated under the supervision of the trustee and the fund is used to pay off the creditors.
Credit Counseling Course is Required
You’re required to complete a Credit Counseling Course within 180 days prior to filing Chapter 7 bankruptcy. You need to complete your counseling session with the help of certified counselors. This requirement was added when the bankruptcy laws were overhauled in 2005. You must get the counseling from an agency that has been approved by the United States Trustee’s Office; you can find a list of approved counselors on their website. If you don’t get credit counseling and file a certificate of completion with the court, your case will be dismissed.
Debtor Education Course is Required
In addition to completing a Credit Counseling course, a Debtor Education Course (also known as Financial Management) must be completed after filing for bankruptcy but prior to discharge. The course provides budgeting and financial planning resources for the future. Failure to complete this course will result in your case being dismissed or your discharge denied.
Once your requirements have been fulfilled, your debts can be discharged giving you a new opportunity to achieve financial freedom and start fresh.
This is a guest post by Andrew who writes for financial communities.