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THE BANKRUPTCY PROCESS
1. Gauge your income and analyze
your debt
Before you file for bankruptcy you must first identify all
of your income, expenses, financial transactions, debts
including credit card accounts, loans, medical bills, student
loans, etc. How much property you own and how much of it
is exempt. This will factor into the amount you'll have to pay
under a Chapter 13 bankruptcy plan.
You must have sufficient income to make payments
under a proposed Chapter 13 Plan. Alternatively, a Chapter 13
Plan that does not provide sufficient repayment of debt to your
creditors may not get confirmation approval from the Bankruptcy
Court due to an objection from a creditor.
2a. For Chapter 7 Bankruptcy
Filing
The documents to file the bankruptcy Petition must be prepared.
These documents are quite extensive, and can easily involve hundreds
of pages. You must list your income, property, expenses, debts
and provide detailed information about your financial affairs.
The local and federal Bankruptcy Court rules, as well as state
exemption rules are to be followed in composing the bankruptcy
filing. Once documents are completed they must be filed in the
appropriate Federal Bankruptcy Court along with payment of the
applicable filing fee.
2b. For Chapter 13 Bankruptcy
Filing
To begin a Chapter 13 bankruptcy, the documents needed to file
the bankruptcy Petition must be prepared in similar fashion to
a Chapter 7 bankruptcy. You must list your income, property, expenses,
debts and provide detailed information about your financial affairs.
However, In a Chapter 13 bankruptcy you must also file a workable
plan that provides a fair appraisal of your expenses and how you
plan to handle your debts over the plan period. Typically in a
Chapter 13 bankruptcy, some creditors will receive 100% of what
you owe them, while others may receive a much smaller percentage
of what is owed to them. The Chapter 13 plan consists of a payout
period of over three to five years.
3. Meeting with Creditors
Around 30 days after you file for bankruptcy and the Court accepts
the filing, the Court sets a meeting with your creditors pursuant
to Section 341 of the Bankruptcy Code. The creditors will receive
a notice from the Court advising of your filing, and when the
meeting will be held. You must attend this meeting where all your
creditors have the right to question you about your debts, assets,
etc. and any objections creditors regarding your bankruptcy may
be discussed at this meeting. In most instances, this is the only
meeting that will occur for the majority of debtors. In some instances
only a few creditors attend the meeting. If an objection is raised
and a resolution cannot be achieved, the presiding judge will
intervene.
After this hearing you will normally not need to
return to court for a Chapter 7 bankruptcy. However, if a creditor
files a motion or an adversary action, most likely you will have
to return to court.
Under most circumstances, in a Chapter 7 bankruptcy
the Bankruptcy Court will automatically issue the discharge 60
days after the meeting of creditors.
4. Court Approval of Chapter
13 Repayment Plans
In a Chapter 13 bankruptcy the Bankruptcy Court will conduct a
hearing for the Debtor to obtain court approval "Confirmation"
of the Chapter 13 plan. Under the Plan, you make payments, usually
monthly, to the Bankruptcy Trustee, an official appointed by the
Bankruptcy Court to oversee your case. The trustee in turn pays
your creditors and collects a statutory fee based on the amounts
paid out under your plan. You must adhere to the plan’s
schedule and requirements.
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