the bk process

The Bankrupcty Process

Although the Federal Bankruptcy laws changed in 2005, however the vast majority of people who were eligible for chapter 7 before the law changes are eligible now. The new law simply requires you to complete more steps and cut through a little more red tape in order to file for bankruptcy.

You will now have to attend a counseling session before filing. This could take the form of a simple thirty-minute phone call to a credit counseling agency and some agencies even provide these counseling sessions online. You will also have to attend a financial management course after you file, but before you receive your discharge. The fact is you will only have to do this if the Trustee's office approves agencies to provide the course, or offers the course itself.

You will be required to attend one hearing which occurs about one month after your case is filed. This is referred to as the “meeting of creditors.” You will be sworn in and asked some questions by a bankruptcy trustee. The questions are generally related to your assets, income, and the accuracy of your petition. Your attorney will be with you at this hearing. You must furnish your photo ID and proof of your social security number at this hearing, as well as other documents related to your specific situation.

There are specific exemptions that (if properly applied) will protect most assets. When the bankruptcy laws were reformed in October of 2005 the rules regarding which exemptions a person can use drastically changed. The rules are related to where you have lived in the recent past.

Once the bankruptcy case is filed, creditors are barred from contacting you for collection purposes. This is referred to as the “automatic stay” which is very powerful and is designed to put an immediate stop to all collection activity.

A typical Chapter 7 process takes about 3 to 4 months from the time of filing until the debts are discharged. A Chapter 13 is a longer bankruptcy because it is designed to restructure your debts and allow you to repay some, or all of your creditors based on what you can afford. Chapter 13 cases may vary in length, but typically are 36-60 month plans.

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