If you’re currently overwhelmed with debt, filing for bankruptcy may be the debt solution you’re looking for. Bankruptcy filings can stop collection agencies from making calls, wage garnishments, and other efforts to collect your debt repayment. Declaring bankruptcy also eliminates most of your debts and wipes out your liabilities.
Before you start working on your bankruptcy petition, it’s important to know how bankruptcies work so you understand what you need to do and what you have to give up to get your bankruptcy discharge and wipe out your debts. This article will help you learn about the basics of personal bankruptcy, so you can make informed decisions about your financial future.
What Bankruptcy Is
Bankruptcy is a court proceeding that allows a debtor to get a fresh financial start. Through the bankruptcy proceedings, your assets and liabilities are examined. Depending on which type of bankruptcy you filed, some of your property may be sold to repay a portion of the amount owed. At the end of the process, you’ll receive your bankruptcy discharge and your debts will be eliminated. Consult with a reliable bankruptcy lawyer to know whether bankruptcy is the debt solution for your financial situation.
What Bankruptcy Can Do
Once you’ve filed your bankruptcy petition, the automatic stay is put into effect. This injunction can stop debt collectors from calling you or garnishing your wages to repay your debts. It can also temporarily stop foreclosure and repossession proceedings while you are going through the bankruptcy process. Talk to a local bankruptcy attorney if you’re not sure whether a certain action is affected by the automatic stay.
Types of Bankruptcy
The two common types of consumer bankruptcy are Chapter 7 and Chapter 13. Speaking with a local attorney regarding your situation can help you decide which type of bankruptcy is best for you.
Chapter 7 or liquidation bankruptcies involve liquidating your nonexempt property to pay your creditors. You’ll still be allowed by the bankruptcy court to keep property that falls under bankruptcy exemptions, such as your home, car, and the tools of your trade. By the end of the bankruptcy process, your unsecured debts will be discharged and you’ll no longer be responsible to repay them.
It’s typically best to file for bankruptcy Chapter 7 if you have a low income and only have a few assets or property. You won’t be able to pass the means test if you have a high monthly income, which means you won’t be qualified to file bankruptcy Chapter 7. However, you can still declare bankruptcy under Chapter 13.
Chapter 13 bankruptcy is also known as a wage earners plan since it involves reorganizing your debts into a repayment plan that lasts three to five years. As long as your secured and unsecured debts don’t exceed the debt limit, you’ll be qualified to file Chapter 13. This type of bankruptcy is best for debtors who don’t qualify for Chapter 7 or want to declare bankruptcy without giving up their property.
The first thing you need to do is fill-out the bankruptcy forms and complete a credit counseling course. The bankruptcy process begins when you file your bankruptcy petition to the court. After filing bankruptcy and paying the appropriate fees, a trustee is assigned to your bankruptcy case. Bankruptcy trustees are in charge of evaluating the information you provided, liquidating your nonexempt property, and distributing the proceeds to your creditors.
The next part of the process is to attend the meeting with creditors if you filed for Chapter 7. During the meeting, you’ll be asked under oath to verify the bankruptcy information you provided, and creditors are allowed to ask you questions as well.
If you filed Chapter 13, you’ll need to propose your payment plan. This involves restructuring your debts so you can make monthly payments that are feasible given your situation. Once your plan is finalized at the confirmatory hearing, you can start repaying your debts accordingly.
After finishing your debtor education course and completing the bankruptcy procedure, you’ll be able to receive your bankruptcy discharge and get a fresh start for your financial future.
Hire a Bankruptcy Attorney
If you’re considering filing for bankruptcy in Phoenix, Arizona, you should make sure that you’re doing it right even before you file your petition. At Phoenix Fresh Start Bankruptcy Attorneys, we can provide you with legal help to ensure that you can get a fresh financial start. Call us today and schedule your free consultation!