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For many people, bankruptcy can be a hard choice to make. There are many individuals that have been responsibly paying back their debt for years that run into a horrible life circumstance that puts their finances into shambles. Furthermore, the credit card companies, no matter how loyal you have been, don’t make things easier on you.  I have know of individuals who have been loyal customers to credit card companies  for years who have had their cards cancelled and their debts accelerated because of a small number of missed payments during tough financial times.

Before you file for file for Bankruptcy  you must make sure there are no other alternatives, especially since bankruptcy will remain on your credit report for up to ten years. One alternative might be to vacate default judgments against you.  This  can be a tool usede to clean ones credit. If after consultation with an attorney, this does not appear to be an option then you need to consider what type of Bankruptcy to apply for.  The most common types of consumer Bankruptcy types of Bankruptcy, Chapter 7 and Chapter 13 for Individuals with consumer debt.  In Chapter 7 bankruptcy the debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. In the vast majority of cases the debtor has no assets that he would lose so Chapter 7, so aside from the stigma and the damage to one’s credit, Chapter 7 gives the Debtor a fresh start.

Chapter 13 Bankruptcy Bankruptcy is filed by individuals who want to pay off their debts over a period of three to five years. This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep.

The Steps for filing a bankruptcy petition are as follows.  Firstly, after consultation with an experienced attorney,   the debtor will have to get counseling from an approved agency. Prior to obtaining a discharge the debtor, must take a Financial Management course , which is required by the bankruptcy court. The failure to take these two courses will lead to dismissal of the debtor’s petition. Also it is advisable after retaining your attorney, to refer your creditors to your lawyer’s office so he or she can speak on your behalf.

After the counseling, the debtor will file with the bankruptcy court  a petition, with schedules of assets and liabilities and a statement of financial affairs. The debtor will also be required to pay the filing fee.

In order to qualify for a Chapter 7 bankruptcy the debtor, who has primarily consumer debts must pass the means test , or face a motion to dismiss the case or to have the case converted to another chapter, like Chapter 13.

The debtor must also file paystubs from the past 60 days prior to filing the petition with the most recently filed tax returns.

After about a month the debtor will be required to attend a meeting called the 341 Meeting of the Creditors, where the Trustee assigned to the case will ask the debtor a number of questions about their finances. Generally this meeting is very brief, especially in case where there are assets involved.

After about three to six months of filing of the debtor’s petition, the debtor will obtain his discharge.    The main reason why a bankruptcy case might be delayed is because certain creditors might object to the Debtor’s discharge or because the Trustee wants to investigate whether the Debtor has any non exempt personalproperty. If you have any other questions about the filing of bankruptcy, please do not hestitate to give me a call.