If you have a large amount of unpaid debts and can not find the resources to pay off your creditors, one option for you to solve this problem is to file for bankruptcy. Filing for bankruptcy can discharge you from all your eligible debts. This will allow you to have a fresh start and give you a chance to handle your finances better. Here are some things you should know about filing for bankruptcy.
Two ways
There are two ways that you can go about it. One is to file for a chapter 7 bankruptcy which allows you to pay off your creditors by the liquidation of all your non-exempt assets like real estate and automobiles by the bankruptcy trustee. The cash converted from liquidation will be distributed to the creditors. Another way is by filing a chapter 13 bankruptcy where you can pay off your debts within three to five years through a payment proposal. This is ideal for those who have a steady income and who do not wish to let go of their non-exempt assets.
Process
A bankruptcy petition, usually 20 pages long, is made by the debtor. This petition contains the debtor$%:s personal information, financial activities, secured and unsecured debts, creditors, assets, tax returns, and other related information. There is also a bankruptcy form available in courts that can serve as a guideline for petition. This form is submitted to the local court and a provision is made to prevent the creditors from contacting the debtor and seizing any property within a month. After a month, a meeting of the creditors and debtor is called by the court and there will be negotiations. If an objection is made by any one of the creditors, the judge will intervene. If all goes well, the court will send a notice of discharge to the debtor in four to six months relieving all from all his eligible debts.
Exempted debts
Exempted debts or debts that will not be written off are those that are not listed in the petition, child support and alimony, debts incurred from personal injury or death, student loans from government organizations (except in special cases), and fines and penalties incurred for violating the law.
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