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Steps On How To File For Personal Bankruptcy

Wed, 01/14/2009 - 04:23 — Mydrive
Personal bankruptcy is a very serious decision. One has to carefully weigh his options and the consequences of his decisions before taking this step. Bear in mind that a record of bankruptcy will stay on your personal credit report for at least seven years.

A record of bankruptcy will impose certain limits and restrictions on your future plans. Therefore, being stuck in bad credit doesn't mean you have to think about filing for bankruptcy right away. Consider all other possible options first to recover from bad debt.

Nevertheless, if you made the decision and if you're ready to go through the whole process, here are the steps you should take when filing for personal bankruptcy.

Seek credit counseling. In the past, a person who decides to file for bankruptcy can just fill out an application and submit. However, since the amendment of the bankruptcy law, this decision is not up to the individual anymore.

In order to know if you're eligible for bankruptcy, it is mandatory to first complete a credit counseling course from a government accredited agency. The credit counseling agency would be the one to decide whether you are a candidate for bankruptcy or not.

In case you're not eligible for bankruptcy, rest assured that the credit counseling agency will help you get out of your debts more easily. They can negotiate with your creditors for a more convenient repayment plan and you will receive guidance and support in managing your finances. The good thing about this arrangement is that you can rebuild your credit report without resorting to bankruptcy.

Hire a bankruptcy lawyer. If you are eligible for bankruptcy, you must hire your own bankruptcy lawyer. Preparing the documents needed to start the bankruptcy process is complicated and should only be accomplished by an attorney.

Your lawyer must see to it that all the information on your documents are correct to avoid being accountable. Because of the weight of this responsibility and the many tasks involved in filing for bankruptcy, a bankruptcy attorney may ask a high service fee for his services.

Pass the "Income Means Test Calculation". After submitting your bankruptcy application, you will submitted to the "income means test calculation". Here, your income would be tested as to whether you are capable of paying your creditors or not.

If the result of your "means test" falls below the required capacity, you will be eligible to file for Chapter 7 bankruptcy. If it's beyond the income requirement, then you would have to file for Chapter 13 bankruptcy.

Chapter 7 Bankruptcy. If your application for bankruptcy chapter 7 is approved, then you are immediately discharged from all your debts to your creditors. However, bear in mind that this will be reflected on your credit report and will remain for a maximum of seven years.

Chapter 13 Bankruptcy. If you filed for Chapter 13 and is approved, you will be subjected to a five-year repayment plan where you must submit a percentage of your salary each month to pay your creditors. The percentage of the salary deduction would depend on the amount of debt you owe and the value of your monthly income.

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About the Author Melanie Mathis is a credit analyst and an assistant writer of Liz Roberts for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving out Free Credit Repair and Building Ebook. NHBS also has a list of recommended bad credit credit cards. Copyright 2009.

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Comments

Tue, 04/14/2009 - 06:56 — KristenJames

If I declare personal

If I declare personal bankruptcy can i still keep business?
Thu, 04/16/2009 - 21:33 — C.Angel

Best ask your bankruptcy attorney

I considered filing bankruptcy last year. Each attorney I spoke to seemed to have a different take on my situation. I think filing bankruptcy might be a case by case type of action that differs depending on your situation. I read an article called Negotiate Your Debt Like A Professional and my sisters took turns calling my creditors. I did have to sign a power of attorney and we DID NOT tell them they were my sisters since they have a different last name. They thought they were dealing with debt counselors that were helping me. I settled all but 3 of my accounts. Avg was for 35 - 40% of what I owed. Only one company was willing to remove their line from my credit report which was disappointing, but the others did change from delinquent or charged off to settled as agreed. The other 3 I'm just going to leave they were small and over 4 years. Just 3 more years and they will fall off anyway.
Fri, 05/08/2009 - 10:48 — BraylonE

bankruptcy and crisis

Filing for personal bankruptcy is almost the same in filing for chapter 11of bankruptcy for companies. And the latest and shocking filing for it is done by the GGP or the General Growth Properties which owned 200 shopping malls around the country. The bigger they are, the harder they fall, and General Growth Properties was very big. General Growth Properties is also the biggest fall of a real estate giant in living economic history. GGP started out in the 50s building shopping malls across the country. Their recent filing for Chapter 11 bankruptcy was a shock in the real estate world. (Although the Mongol empire technically lost way more real estate, but far be it from anyone to give some solipsistic CEO a historic perspective.) Installment loans weren't enough to save them, and they’ve gone the way of the dodo. There wasn't enough debt relief available to save General Growth Properties.
Sun, 05/17/2009 - 14:37 — Jamie94

Can I file bankruptcy to

Can I file bankruptcy to clear a judgment that has been placed yet?
Sun, 05/17/2009 - 14:38 — Jamie94

Can I file bankruptcy to

Can I file bankruptcy to clear a judgment that has been placed yet?
Sat, 08/08/2009 - 08:51 — joshpin

Bankruptcy

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors.
Tue, 08/18/2009 - 12:59 — jiim

Seek credit counseling. In

Seek credit counseling. In the past, a person who decides to file for bankruptcy can just fill out an application and submit. However, since the amendment of the bankruptcy law, this decision is not up to the individual anymore.
Tue, 09/15/2009 - 08:24 — thomas987

bankruptcy

great information about how to file for bankruptcy. i got also a great information from onlinebkassist.com about filing a bankruptcy without attorneys fees. if you want to know more about this company just go to there website.
Fri, 11/13/2009 - 04:29 — abshandra

declaring bankruptcy is

declaring bankruptcy is really bad for your business. Even if you can start all over again, it is not easy to get your reputation back. Most of your business partners will think twice if they know you ever filing bankruptcy. It is better to avoid bankruptcy, since it is really bad for business. So, what you need to do is better planning and be wise in management. But, if you believe there are no other ways, you may file for bankruptcy.

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