If you are having difficulty paying your bills, bankruptcy may provide you with a means of debt relief. Follow these steps to begin the bankruptcy process.
Means Testing
To qualify for Chapter 7 bankruptcy, you must meet the means required in your state. You can check the U.S. Trustee’s website for the applicable income limit. Your income will also affect the amount of your payment if you decide to file under Chapter 13. If you are unsure how the means test applies to you, consider consulting with a bankruptcy attorney Howard County MD.
Debt Education
You may be required to participate in an approved credit counseling program before filing bankruptcy and take a debt education course after filing. Approved providers can be found on the U.S. Trustee website.
Exemptions
When you file for Chapter 7 bankruptcy, a trustee will sell your nonexempt property and transfer the proceeds to your creditors. However, you can protect exempt property from being sold. Under Chapter 13, your property is not sold, but you are required to pay the value of your nonexempt property to your creditors.
Exempt property can include a portion of the equity in your home, disability benefits, life insurance proceeds, some types of personal property, tax-exempt retirement accounts and others. You will need to check your state exemption list or consult with your attorney to determine what portion of your property may be exempt.
Bankruptcy Forms
Before your case goes to court, you will need to complete the bankruptcy schedules, which provide the court with information on your income, expenses, debt, property and property transactions. These forms can be completed online and then filed with the bankruptcy court in your area. A filing fee may apply and you may need to provide proof that you have completed the required credit counseling course.
After You File
Once you have filed, an automatic stay will apply to your debts. Your creditors can not pursue any collection activities during this period. The bankruptcy trustee will review your paperwork for any exemptions he feels should be challenged. Approximately one month later, you will need to attend a meeting of creditors and turn over any non-exempt property you have. Your creditors have 60 days to challenge your right to discharge. In three to six months you should receive a notice from the court that your dischargeable debts have been discharged.
Bankruptcy exists as a means for debtors to discharge debt they do not have the ability to repay. You can complete these steps yourself, but it may be useful to consult with an attorney.
