If you have considered all alternate options and have finally decided to file for bankruptcy, then there are a few things you should know before you begin. Filing your own petition can be quite a daunting task and seeking professional help in Milwaukee, WI will save you a lot of stress – Wisconsin Debt Advisors can help you file.
It also can give you peace of mind knowing that you are in experienced hands, instead of waging the battle all alone. Nevertheless, knowing what is involved in the filing process even before your approach a legal counsel, can help you speed up the whole process and help you choose one wisely.
Read on as we give you a step-by-step guide on how to file for bankruptcy.
Types of bankruptcy
Before we jump to the steps involved, it helps to familiarize yourself with the two types of bankruptcy options.
Chapter 7 bankruptcy is also called as “straight bankruptcy” or “liquidation”. This involves selling most of your assets to repay your debt. With this option, you can clear most of your debts and start afresh. But it is not without its disadvantage, as it will reduce your credit score in the process.
Though this seems like a straightforward option, qualifying for a chapter 7 is difficult due to stringent eligibility criteria that includes a ‘means test’. It also does not allow high income individuals or those with a high number of assets and imposes limits on some types of debts.
A Chapter 13 bankruptcy is different from chapter 7 in that it does not involve selling of your assets but lets you repay your debt with a repayment plan that typically spans over a period of 3 to 5 years. A chapter 13 is usually filed, if your income exceeds chapter 7 limits.
Once, the course of the repayment plan is successfully completed, you are deemed debt-free. Like the chapter 7 option, this one comes with its own set of rules and eligibility criteria.
Steps To File For Bankruptcy
The very first step will be to create an inventory with all the information pertaining to your finance.
- Income information
This is not just information on your regular monthly income but should include all the money you may receive from other sources like bonds, shares, pension, any part-time jobs etc.
This list should include all your other financial commitments such as utility, food, rent, mortgage, medical expenses, child support, alimony etc.
- Debt information
This should contain information about all the debts, their respective creditors, the interest rates and the current status of these debts.
This list should include everything that can be liquidated and not just your physical assets like your property and your car. So include details of any bonds, shares, stocks and your savings account. Though basic things like food, clothing and furniture come under ‘exempt property’, any particularly expensive piece of furniture or clothing can also be listed.
- Credit counseling
Before you go ahead with filing your petition, you must complete a mandatory credit counseling from a U.S trustee program approved organization. Your inventory will help the agency decide the type of bankruptcy suitable for you.
Upon completion, you will receive a certificate that should be submitted along with your bankruptcy forms. Without this, your petition will be rejected straight away, in case you think of taking one after filing your petition.
When you file for bankruptcy, the court will appoint a trustee to your case, who will work on behalf of the creditors. The trustee will access your assets and also verify the details filled on your bankruptcy forms. So all the information that you gathered in point number 1 will come in handy here.
- Meeting with the creditors – the 341 meeting
Once the bankruptcy is accepted, the next step involves a formal meeting at the trustee’s office between you and the creditors. You will have to answer all question regarding your assets, the debt and why you are filing for bankruptcy.
- Debtor education counseling
Depending on the type of bankruptcy, you will either have a post bankruptcy counseling after the 341 meeting (Chapter 7) or before your last payment (Chapter 13).
Once all your debt is repaid, a debt discharge is granted that deems you debt-free and relieves you from all legal obligations. However, not all debts can be discharged and some debts like student loans, alimony etc cannot be written off and need to be paid by the debtor.
Get help before it’s too late
Even though it is possible to file your own petition for bankruptcy, in reality, many end up losing valuable time and even have their petitions denied due to incorrect information or errors. This will only worsen the situation for you instead of helping your recover from your debt.
Seeking professional help from an attorney in Milwaukee, WI will not only speed up the process for you but can also increase the odds of a successful petition.