A bankruptcy filing help individuals have a fresh start with their finances. Struggling with debt and financial problems can be extremely stressful. Filing for bankruptcy allows you to repay your debts and obtain a bankruptcy discharge. When you file a bankruptcy petition, the court shall evaluate your bankruptcy case. Once they approve your bankruptcy petition, an automatic stay will immediately be in place to protect you from creditor harassment. This will prohibit wage garnishment, foreclosure, and repossession, and any collection activities from debt collectors.

In filing bankruptcy, you may also want to consider which types of debts are dischargeable and non-dischargeable. Filing a petition in bankruptcy does not mean that all kinds of debt will be discharged. Dischargeable debts are the ones that can be wiped out by filing consumer bankruptcy. This type includes credit card bills and medical bills.  On the other hand, non-dischargeable debts are the ones that cannot be eliminated by the bankruptcy court. These are secured debts, child support, alimony, student loan debt, and certain tax debt.

There are also different bankruptcy chapters that you may choose from depending on your monthly income and living expenses. There are also qualifications for each bankruptcy chapter. It may be based on the types of debts you owe or your capacity to pay off debts.

The most common bankruptcy filings are under Chapter 7 or liquidation bankruptcy and Chapter 13 or reorganization bankruptcy. In filing Chapter 7, the bankruptcy trustee will liquidate the nonexempt assets of the debtor and distribute the funds to the creditors. At the end of the bankruptcy proceeding, your debts shall be discharged and you will be cleared from making payments.

Bankruptcy Chapter 13, in contrast, requires a filer to make monthly payments in a span of three to five years. Your payments under this chapter will be based on the approved debt repayment plan. After the completion of the payment plan, your remaining debts would also be eliminated.

If you are not eligible to file under Chapter 7, you might want to consider filing under Chapter 13. Chapter 13 may also be the best option for you depending on your bankruptcy case. There are things that you need to remember to have a successful bankruptcy procedure under this chapter:

  1. Prepare all the necessary paperwork

Filing Chapter 13Bankruptcy proceedings require a lot of documents. This is why it is important to seek legal help from a bankruptcy attorney who can help you throughout the proceeding and prevent any legal issues during the entirety of the bankruptcy process. Usually, filing Chapter 13 requires debtors to provide the bankruptcy court (and trustee in bankruptcy cases) with complete documentation of their monthly expenditures, monthly bills, assets, a record of any previous bankruptcy filing, and any pending judgment against the filer, if there is any.

For example, if you accidentally missed out on any detail or information, you will be required to pay additional fees, provide more paperwork to the bankruptcy court, amend the debt repayment plan, and complete additional procedures before you can complete your bankruptcy filing.

Take note that if you forgot to include one of your creditors in the documentation, the existing debt that you owe to that certain creditor will not be included in the bankruptcy discharge. This means that you will still be obliged to pay back that debt even after the Chapter 13 bankruptcy proceeding.

It is also important, to be honest with all the information that you will provide to the bankruptcy court. If you purposely did not include a certain detail or information that is required, you may be subjected to fines and criminal penalties because of intentionally committing fraud.

  1. Prepare supporting documents for your bankruptcy petition

Debtors must have all the required financial documents ready for the trustee to be able to evaluate them. These records include but are not limited to, tax returns, deeds, paystubs, bank statements, retirement account statements, mortgages, and documents of car loans.

It is recommended to have a separate file for each form of paperwork and organize the documents by date so that it will be easier to give the bankruptcy trustee any record that is requested. It is necessary that you continuously update these records during the proceeding because Chapter 13 bankruptcy cases usually take up to several months before it is complete.

  1. Make a realistic repayment plan

Making regular payments are important when you file Chapter 13. Failure to settle dues following your payment plan could affect the entire bankruptcy process. Debtors under a Chapter 13 bankruptcy declaration must make a household budget that will enable them to regular make monthly payments.

Consulting a credible and experienced bankruptcy lawyer can help you create a realistic plan after calculating the household’s disposable income. Bankruptcy attorneys will assist you on how you can obtain the most benefits out of a bankruptcy filing, despite having to make all these payments.

Seek legal assistance to secure your financial future. Talk to us at Phoenix Fresh Start Bankruptcy Attorneys for a free consultation. Call 602-598-5075 for more information.