Basics Of The Bankruptcy Process

The bankruptcy process can be overwhelming for anyone experiencing financial hardship. Due to the complicated, legal nature of the process many people simply don’t understand how it works or could benefit them. While the process isn’t meant to be intimidating, there are some specific guidelines that you will need to follow. Understanding the basics of the bankruptcy process can help you put your best foot forward.

Basics Of The Bankruptcy Process

When considering bankruptcy, you will first be subject to a means test. This test determines your eligibility for Chapter 7 bankruptcy. If your income and family size exceed the level set by your state, you will not be eligible for Chapter 7 and must file a Chapter 13 instead. You will also be required to complete a credit counseling course with the 180 days prior to the filing of your case.

To initiate a filing, the court will require a lengthy document called a petition to gain an understanding of your financial position. This document lists in detail your income, accounts, debts, assets, and other relevant information. This information is used to evaluate your financial situation. It is extremely important that this information be accurate and honest. Attempting to hide income, funds, or assets is wrong and could lead to your case being dismissed or you going to prison.

Once your case has been filed with the court, a court order will be provided to all of your creditors. This order is called an automatic stay and it prohibits creditors from making further collection attempts.  Approximately 30 days after your filing, you will be required to attend the 341 meeting of creditors. This meeting is held to allow for creditors to stake their claim and for any reaffirmation agreements to be made. After this meeting, you will follow the instructions given by your trustee until the case is discharged.