What happens when I file bankruptcy?
Personal Bankruptcy can be filed 2 ways: Chapter 7, commonly called “fresh start” since all your debts will be cancelled when your case is discharged, which takes between 3-4 mos after filing. Chapter 13 which is a 3 year payback plan that is monitored by the court. Many times it is difficult for people to pay off all their debts in 3 years so people sometimes then are allowed to file chapter 7 after that. That means it is difficult to obtain any credit during the 3 years. The new bankruptcy laws that President Bush signed into law was lobbied (pushed) hard by the credit card companies to pass because it was in their best interest to keep Americans in debt. Think long and hard about filing Bankruptcy. Consult with a competent Bankruptcy Attorney before filing. What the new law means is that you will have to meet an income test relative to your state’s average income. Also you may have to attend credit counseling. If you file Chapter 7 Bankruptcy your debts will be “discharged” and you
If you income falls below the state median, you may file a chapter 7 bankruptcy by filing a petition and 30 or more pages of additional paperwork detailing your financial situation, along with supporting documents like credit reports, appraisals, etc. Immediately upon filing, your creditors are prohibited from bothering you or attempting to collect on the debts. A trustee is appointed by the court to review your filing. In about 4 to 5 weeks later, you have to appear before the trustee for a 341 meeting. At the meeting the trustee reviews your file and asks specific questions. Your attorney will thoroughly review the questions before hand. You will usually receive your discharge about four months after the trustee meeting, providing there are not objections from creditors.
