Filing for bankruptcy can seem to be quite intimidating for most people owing to the various disadvantages it has. However, despite all the negativisms associated with it, a bankruptcy can prove to be extremely helpful in dealing with severe debt crisis. An experienced attorney or legal advisor can provide necessary bankruptcy advices that would help you decide if it can be useful in your financial situation.
For a successful bankruptcy filing, it is important to follow certain compulsory rules and regulations made by bankruptcy courts. An expert legal advisor can help you know the essential formalities you need to fulfill before filing for bankruptcy:
- It is compulsory for individuals to complete a credit counseling course under the guidance of a licensed credit counselor, and submit the certificate of completion to the court during the time of bankruptcy filing.
- It is also a compulsory rule to undergo a means test to prove an individual’s eligibility for bankruptcy filing. This test is carried out to prove that an individual’s annual income is less that the median income for the size of their household in their state.
- It is compulsory for individuals to submit essential documents proving their annual income and personal expenditures in the court during the time of filing. They also need to submit their photo identification and a list of the names of their creditors. The documents proving the income of the petitioner include bank statements, a pay stub, copy of paychecks, rental agreements and all other proofs for their income during the last six months prior to the bankruptcy filing.
Personal bankruptcy is the legal procedure of declaring insolvency available only for individuals and not for organizations. Personal bankruptcy is divided into two types, namely, chapter 7 bankruptcy and chapter 13 bankruptcy. Let us discuss in brief the two types of personal bankruptcies, to understand their basic differences.
Chapter 7 bankruptcy is for individuals possessing non-exempt assets. Once they file for bankruptcy, these non-exempt assets are seized by the bankruptcy court for making debt payments to the creditors. However, it would be wrong to assume that once you file for chapter 7 bankruptcy, you would lose control over all your assets. There are provisions in the law to enable you to retain some of your valuable assets.
Chapter 13 bankruptcy is ideal for individuals making a decent earning despite being under a debt burden. This form of bankruptcy helps individuals with easy repayment plans that would allow them to make debt payments over a fixed period of time as per their financial affordability and conveniences.
In order to obtain adequate information on the type of bankruptcy that’s most appropriate in your financial situation, the various rules necessary for bankruptcy filing, and how bankruptcy can help you in overcoming your financial crises, it is essential for you to have appropriate bankruptcy advices from a reliable source. An expert and experienced attorney can provide you with all the necessary bankruptcy information that can effectively sail you through your debt crisis.