A Guide For How to File Bankruptcy in 2020 Step by Step

Bankruptcy is a lawsuit involving a person or organization that is unable to pay back its unpaid debts. The bankruptcy process begins with the most frequent or less frequent debtor petition, or on behalf of creditors. The assets of both debtors are measured and calculated, and the assets will be used to repay a portion of the outstanding debt.  

Bankruptcy in detail:

Bankruptcy offers an entity or a company the opportunity to start a new one by exonerating unpaid debts, while at the same time giving creditors the right to obtain a recovery on the basis of the assets available for a person or business to be liquidated.

In theory, the right to file for bankruptcy benefits the wider economy by providing people and companies a second chance to reclaim access to credit and by granting creditors a portion of debt relief.

Once bankruptcy proceedings are successfully completed, debt liabilities incurred before bankruptcy filings are released from the debtor.

Before you start, you have to decide if you are going to file for Chapter 7 or Chapter 13 bankruptcy. For and form, there are benefits and drawbacks, and depending on what your goals are, one will be the better option over the other. For example, Chapter 13 would be the safer option if you have the non-exempt (unprotected) property that you want to save from the potential fate of being sold, in  Chapter 7 bankruptcy, it is used to cover your unsecured debts.

Steps to File a Bankruptcy:

1.     Collecting all the documents:

Copies of your credit report would be needed so as to collect from the credit reporting agencies. Once every year, you can get a copy of your credit reports for free.

You'll want to find out how much debt you owe and who your creditors are before you begin to fill out any forms. Please remember that your credit report won't list all of your debts. In your bankruptcy forms, you will be allowed to reveal all of your debts, irrespective of whether they are reported in your credit reports (medical bills, tax debts, fees, and fines). Also, maintain a list.

Analyzing the debt:

When the debt form you owe is labeled, you will need to decide if your debts are secured debts or unsecured debts. The debt secured is debt connected to some forms of collateral.

Two of the most popular examples of secured debt are the mortgage or car loan. The unsecured debts include debts from a credit card, medical bills, payday loans, and all other debts that are not attached to any particular property. The next step in your debt review is to figure out which liabilities are prior debts and which are non-priority liabilities. The popular priority debts are payments of child care, family subsidies, and some tax liabilities.

Your debts will have an effect on the repayment sum and the order in which your trustee drives your plan payments per month in compliance with Chapter 13.

List of inventory you have:

Make a list of all the assets that you own and the value of each object. This is crucial because, when using bankruptcy exemption legislation, you must know what you have, and how many of them you can cover.

Creating a Budget and figuring out the status of income:

In some cases, there are chances that you must be receiving revenue other than from employment, from another verifiable source. You would be able to prove that your revenue is enough for you to make regular plan payments if you receive government benefits, financial support from friends or family, or monthly retirement payments.

Taking the first credit counseling course

The course takes about an hour and can be done by phone or online.

You can obtain a certificate of completion after you complete the course. You must hold a copy of the bankruptcy document and file it.

Complete bankruptcy forms:

In the bankruptcy process, this is theoretically the longest-term step. About anything you do, spend, own, and owe, the forms ask you the questions. 23 different formats, taking the total to approximately 70 pages, are available. You need to send a full and accurate picture of your financial situation to the courts and enter all your financial details.

Filing the Bankruptcy petition and paying the filing fee.

You will need to print the file, sign the pages of signatures and submit them to court after you have completed and checked your bankruptcy forms. Along with your printed bankruptcy forms, do not forget to include your credit counseling certificate.

The local bankruptcy court needs the exact number of copies so ensure to print the exact number.   You will find out the number of copies you are going to need before filing by calling your local bankruptcy court.

Sending documents to the trustee.

Your trustee, who is the person named to manage your case, would have to meet fair paper demands. Your trustee will ask you to give some financial records to them before your meeting with creditors, including tax returns, pay stubs, and bank declarations.

Attend your meeting of creditors

You will meet with your trustee approximately a month after you submit your bankruptcy petition. You're not going to face the judge assigned to your case! However, your creditors have a right to attend your meeting.

You must check your identification and provide supporting documentation during your meeting with your trustee. It is up to your trustee to verify to make sure that your bankruptcy papers are properly filled out and your proposal is workable with the evidence you have received at your conference.

Keeping up with plan payments:

Now you will have to pay your monthly plan for a period of 3 to 5 years before your case is finished and discharge is entered successfully.

The first payment must be paid 30 days after the bankruptcy form has been submitted. Be aware that your monthly plan payments can increase or decrease before your case is confirmed. You would be disqualified if the company did not receive a payment or if you fall behind in payment and are unable to recover within a reasonable period of time.

Taking the second debtor education course and receiving the discharge.

The last move to obtain your discharge is the second debtor education course.

As long as you comply with the provisions of your plan, at the end of your case, you will obtain a discharge. Many unsecured loans are eliminated from any outstanding balances.

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