The exact details on bankruptcy proceedings may vary from one State to another. For those who intend to file for bankruptcy, they should be aware of the bankruptcy laws amended in October 17,2005 which no longer allowed you to file for bankruptcy on your own. It laid out a series of procedures you must go thru first in order to declare bankruptcy. . Let’s take a look at the basic procedures or changes made in the bankruptcy law.
Steps Required To File For Bankruptcy
Take up a credit counseling course.
One of the biggest changes in the bankruptcy procedures it is mandatory for applicants to complete a credit counseling course at least six months before submitting their bankruptcy application. If upon completion of the course, the credit counseling agency finds that declaring bankruptcy isn’t recommended, the borrower will be advised on how to get out of debt without resorting to bankruptcy.
Filing for a Bankruptcy Petition
You may already be aware that there are different Chapters of bankruptcy (Chapter 7, Chapter 11, or Chapter 13, etc). Under the new law, the bankruptcy court will be the one to decide as to which Chapter of Bankruptcy is applicable based on the applicant’s debt and income.
The Means Test Calculation
The borrower who filed for bankruptcy must go through the Income Means Test Calculation to determine whether he is eligible for a Chapter 7 or Chapter 13 bankruptcy. Take note that only a Chapter 13 bankruptcy will completely discharge the borrower from all incurred debts. On the other hand, a Chapter 7 bankruptcy will put the borrower under a 5-year repayment plan.
The Automatic Stay
Once a petition for bankruptcy has been submitted, the bankruptcy court will send out a Notice of Filing and a Notice of Stay that stops all lenders from debt collection practices. Some lenders who haven’t yet received the Notice of Stay may continue to collect debts. What should you do? Tell your lenders that a petition has already been filed and that they can await a Notice from the bankruptcy court at any time. You can also give out your bankruptcy file docket number as proof of the filed bankruptcy petition.
After the petition has been filed, you may need to wait 30-45 days before the meeting between the assigned bankruptcy trustee and your lawyer. In order for the bankruptcy process to be complete, the debtor is still required to finish a Financial Management Course from a government accredited agency. This is required to ensure that the applicant will not have to go through bad debt again to the point of filing for bankruptcy.