In furtherance of this mission, the law of bankruptcy intends to offer a bankruptcy plan through which an honest debtor may ultimately resolve his or her debts by way of dividing their nonexempt valuable assets to their creditors. This division is to be supervised and orderly, with a reasonable measure of equality among all of the creditors, provided the assets are truly nonexempt from division. Additionally, the law assures the debtor that he or she is to be granted a fresh start upon the discharge, and it assures them they will not be weighed down by their previous obligations which were incurred.
What kind of plan is to be formed is dependent on what chapter for which the debtor is to file, and this may either be Chapter 7 or Chapter 13. The former kind of bankruptcy involves a total liquidation through which the debtor must hand over all nonexempt assets to distribute among all of his creditors, allowing the debtor to emerge with a fresh start after a short period of time. Typically, this period of time is less than six months. The latter kind of bankruptcy is more of an organization that takes place over the course of three to five years. A debtor keeps his assets but must regularly make payments to the court and also pay a certain percentage of their unsecured debt. Upon the end of this period, all of the bankruptcy will be discharged.
Filing for Bankruptcy
When you decide you must file bankruptcy, the first thing you will need to do is to collect all of your information that relates to your personal finances. This includes all unsecured and secured debts, your two prior tax returns, car titles, the deeds to any or all owned real estate and other related loan documents.Your attorney will then file the forms, which are collectively and generally referred to as the schedules. The schedules require that you detail your current state of finances and to detail the last two years of transactions. For Chapter 13 bankruptcy, you will also need to submit a proposal for a repayment plan along with the submitted petition. Upon completion of the petition for bankruptcy, you will need to take the same petition and submit it to the nearest applicable United States bankruptcy court. If you are filing for Chapter 7, the fee is $200 and $185 for Chapter 13.
The moment you file your petition, an automatic stay occurs. This provision is what prohibits any of your creditors from directly contacting you for payment or making any kind of claims to your personal property. A month after you file your documents, you will have to attend a meeting with your creditors, which is generally referred to as a 341 meeting. You are required to attend this meeting as a debtor. This meeting typically does not go on for any longer than five minutes, through which a compromise is made. Provided there are no challenges, you should receive a discharge from your bankruptcy after six months.
