Some Facts About Declaring Yourself Bankrupt

With the passing of the boom years and the entry into more recessive times, many people are finding life financially impossible – crushed by the wieght of debt taken on in the good years. No amount of loyalty to any financial institution has vlaue any more – they simply want their money. By declaring yourself bankrupt you can wipe away your debts and rebuild your financial position.

It is vital however, that you treat bankruptcy as an absolute last resort and examine every possible means of avoiding it. Indeed, under the Bankruptcy Abuse Prevention anhd Consumer Protection Act 2005, any individual must undergo proper consumer credit counselling before 180 days have passed since filing.

These are the steps to be taken if it is found that having gone through all the options bankruptcy is the only viable way forward.

The first thing to do is to determine the relevant chapter to file under. The two main chapters are 7 and 13. Chapter 7 results in the selling of your goods, afterwhich you have no further liability for any debt and is therefore often the most favored option. Chapter 13 is a 3 – 5 year repayment plan. Which type you file under is often determined by the means test applied under the BAPCPA rules.

Secondly, by definition an individual filing for bankruptcy is going to be short of funds. However, it is very important that a lawyer is hired, preferably from a smaller firm so contact is direct and a relationship can be built up. They will also help with the BAPCPA means test, which can be complex.

The third thing is most important. Don’t under any circumstances use your credit cards once you have filed for bankruptcy. If the company finds out ( and they will) that you used your card knowing you were unable to repay, your petition for bankruptcy can be thrown out.

Once your case has been filed, you are protected by what is called “automatic stay”. This means that no creditor may contact you regarding any debt. They may only approach your lawyer which means you will be left in peace.

In order to check that you are being truthful regarding your financial position, you will be required to attend a meeting of creditors shortly after filing for bankruptcy. At this meeting you will be questioned under oath, so that both the court and creditors can be satisfied as to the veracity of your claimed financial situation.

Once your assets have been sold and the proceeds disbursed among your creditors you no longer owe anything, even if your assets were insuficient to cover all outstanding debt, (chapter 7 filing). A notice of discharge will be sent out after 60 days.

Chapter 13 works differently to 7 in that no assets are sold. A repayment plan is drawn up, the terms of which are determined by means test and can be harsh, to repay all your creditors over a 3 – 5 year period. The bankruptcy is discharged when the repayment plan is complete and 30 – 60 days have passed since the final payment.

For further free informaticaboutcerning caboutcerning bankruptcy go to www.declaringyourselfbankrupt.org where you will find a host of useful informaticaboutcerning and advice caboutcerning declaring yourself bankrupt.