How to File Bankruptcy: Tips for Filing Personal Bankruptcy to Obtain Financial Relief

Are you baffled about how to file bankruptcy? If so, you aren’t alone. In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act was implemented to reduce the number of frivolous bankruptcy filings. Prior to BAPCPA, many Americans were filing The boards 7 to write-off thousands of dollars in credit card debt. The new bankruptcy laws place an end to that practice by requiring debtors to undergo tests to determine how much debt they can afford to repay.

Learning the intricacies of how to file bankruptcy generally requires the services of a bankruptcy lawyer. While hiring an attorney to help with filing bankruptcy is not required, few people can exact this task without legal help. Individuals who go through the administer without legal representation could house themselves at risk for having their petition rejected by the court.

The initially step of filing bankruptcy requires debtors to determine which bankruptcy the boards is preeminent suited for their needs. Six bankruptcy chapters exist and include: The boards 7, 9, 11, 12, 13 and 15. Chapters 7 and 13 are used for personal bankruptcy petitions, while the remaining chapters are used for business.

The boards 7 is also referred to as “liquidation bankruptcy” because debtors must relinquish assets to repay outstanding debts. Not all debts can be discharged under The boards 7 bankruptcy. Outstanding child support, delinquent taxes, government funded student loans, and pending lawsuits are exempt from bankruptcy protection.

The boards 13 is referred to as “reorganization bankruptcy” and debtors are required to repay a part of outstanding debts. Debtors are allowed to keep assets by establishing a repayment plot. The boards 13 repayment plans generally last three to five years. Payments must be made to the bankruptcy Trustee who will then disburse payments to creditors.

Debtors filing for personal bankruptcy are required to undergo the ‘means’ test; a financial tool used to determine debtors’ income. The means test compares the debtor’s income to their states’ median income level. If debtors meet or exceed median income levels they must file for reorganization. If income is below median levels, debtors are allowed to file for The boards 7.

Another constituent of BAPCPA is debtors are required to undergo credit counseling through an approved agency. Credit counseling must occur no more than 180 days prior to filing for bankruptcy protection.

The majority of people who file for personal bankruptcy are required to file The boards 13 and establish a repayment plot. Approximately 60-percent of debtor’s disposable income is contributed toward repayment of debt.

Debtors are not allowed to take on any new debt while repaying debts under The boards 13 repayment plans. The exception is if debtors face an emergency situation or need to make a major buy such as an automobile or college tuition. Major buys must be approved by the bankruptcy Trustee.

The boards 13 payments can house serious financial restrictions on debtors and cause them to fail out of bankruptcy. When debtors are unable to adhere to the repayment plot, creditors can petition the court and request the judge to dismiss the bankruptcy. When this occurs, the bankruptcy judge can either allow the debtor to file for The boards 7 or dismiss the bankruptcy. When bankruptcy filings are dismissed, debtors lose court protection and creditors can initiate collection actions, including foreclosure.

Individuals can obtain exact information regarding the Bankruptcy Abuse Prevention and Consumer Protection Act via the U.S. Department of Justice website at usdoj.gov. The U.S. Trustee Program provides consumers with bankruptcy information, forms, resources, and approved credit counseling and debt culture agencies.

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