7 Steps to a Fresh Start After Bankruptcy
Bankruptcy is one option to consider in order giving yourself a “fresh start,” when you have more debts than you have assets. There are in fact many types of bankruptcy provided under the law but the most common is Chapter 7 bankruptcy, which is also known as liquidation.
When filing under Chapter 7 bankruptcy, all your assets, excluding those that are exempt under the law of your state, are dissolved and liquidated. Generally, the person tasked to do this is the court-appointed official, called a trustee.
All in all, the vital task of the trustee is selling your properties and using the proceeds to pay your creditors. After doing such, the court will then cancel many of your remaining debts, thus affording you a “fresh start” to life.
Here is a step-by-step guide to filing a bankruptcy under Chapter 7 bankruptcy:
Step 1: Decide whether you should file bankruptcy or not.
Filing bankruptcy is a personal decision, influenced by many factors, such as the amount of serious debts and your ability to meet the original payments or pay the full amount. For starters, when you are broke, it is never a nice experience getting harassed by creditors for debts incurred. For another, your decision to file should not be made for the sole purpose of putting a stop to your demanding creditors.
This is a significant point as secured creditors may apply for “relief from stay,” thus allowing them to continue their efforts to repossess or foreclose even though you already filed for bankruptcy.
Step 2: Get an attorney
While the law on Chapter 7 bankruptcy does not need individual consumers to hire an attorney who would represent them in court, it is still advisable to ask for legal help, particularly concerning critical decisions involved in bankruptcy.
Step 3: Comply with the legal requirements.
File your petition with the bankruptcy court serving in your area. If you are a business debtor, then file with the bankruptcy court in the place where the business was organized or has its principal place of business or principal assets. Your attorney should be able to advise you on how to deal with these required legal forms.
Step 4: Pay the necessary fees.
As with any other court cases, there are certain fees required, such as:
• Case filing fee
• Miscellaneous administrative fee
• Trustee surcharge
Upon filing, you are usually asked to pay these fees to the clerk of court.
Note that the number of installments is limited only to four. Additionally to that, you are also required to make the final installment no later than 120 days after filing the petition.
Step 5: Notice to the creditors and meeting.
After filing your petition for bankruptcy under Chapter 7, paying the necessary fees, and complying with the legal requirements, an “automatic stay” is granted to you by operation of law. This stay will efficiently stop most collection actions against you and your properties. This means that as long as the stay is in effect, creditors cannot initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments.
After the bankruptcy case has been filed, the bankruptcy clerk will give notice to all creditors whose names and addresses you provided. Then, the case trustee will hold a meeting of creditors between 20 and 40 days after you filed your petition.
Step 6: Cooperate with the trustee.
The case trustee has a vital role in a bankruptcy case. His primary responsibility is to liquidate your nonexempt assets in a manner that maximizes the return to your unsecured creditors. He does this by selling your property, if it is free and clear of liens and as long as it is not exempt, or if it worth more than any security interest or lien attached to the property and any exemption that the debtor holds in the property.
In view of the broadness of a trustee’s power, it is significant therefore that you cooperate with the trustee. Provide any financial records or documents that the trustee requests and answer questions, which the trustee is necessary to ask at the meeting of creditors under the Bankruptcy Code.
Step 7: After the discharge…
If all goes well with your Chapter 7 bankruptcy case – that is, no one files a complaint objecting to the discharge or a motion to extend the time to object – the bankruptcy court will issue a discharge order relatively early in the case, about 60 to 90 days after the date first set for the meeting of creditors
A discharge order is an order issued by the bankruptcy court, releasing you from personal liability for most debts and preventing your creditors from taking any collection actions against you. As a rule, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of Chapter 7 bankruptcy cases.
For someone filing under Chapter 7 bankruptcy, a discharge of almost all of your debts is the ultimate goal. With the release of all your debts and creditors stopped from pursuing any further collection actions against you, the opportunity for a fresh start is apparent.
Pnreddy
http://www.articlesbase.com/debt-consolidation-articles/7-steps-to-a-fresh-start-after-bankruptcy-112592.html
Attorney advised us to quit paying our mortgage?Last winter my husband got laid off for most of the winter and now we are behind on a lot of credit card payments and loan payments and, while our car and mortgage payments are current, our mortgage payment just went up and we feel we can no longer afford it. Our house has been on the market for a few months now, but with the way the economy is right now, we haven't had any offers. We spoke with an attorney who advised us to quit paying our mortgage….he said we would still be able to live here for anywhere from 9-13 months before we had to get out because of foreclosure….and use the money that we would have used for mortgage to start paying our credit cards and loans (most have offered us 50% deals) and then after foreclosure, file chapter 13. I know a couple people who have done this and it has worked out for them, but we are scared because bankruptcy is such a huge step!!! It would allow us to get out of debt faster and have a fresh start, but we are still hesitant. Has anyone else done this and what is your advice? Thanks!
Not sure about your attorney. I would contact the bank and tell them of your predicament. Frankly, the bank does not want your house and would be happier getting some rather than no money. Once you are foreclosed, it will damage your future ability to secure a mortgage.
Same with your car. You may consider dropping the price on your home to adapt to the current market conditions.
Good luckReferences :
The mortgage and foreclosure laws have changed. Depending on your state you may not even be notified by a sheriff at your door that you home is about to be foreclosed upon. Foreclosure proceedings normally begin after the 3rd missed payment, but many companies are now beginning this process 15 days after the first missed payment. I do not know what your attorney's goal is unless its the fact that once you are in danger of foreclosure, your mortgage company is more likely to work with you to work out a lower payment.
Call the mortgage company and keep calling. Tell them you are in danger of missing payments and need to talk to someone. The bank does not want to foreclose on your home. They don't want your house, they want your mortgage. Foreclosure homes are almost impossible to sell at market value since the sales are "AS IS".
I highly recommend you get a different attorney. Your attorney may be in the business of purchasing foreclosure homes and sees yours as just another "opportunity". He does not work for your mortgage company and does not know what their rules are. Get copies of your mortgage paperwork and review them. See for yourself how long you have between not paying and getting removed from the home.
Filing Ch 13 will KILL your credit. Plus, you don't get any payment breaks. You have to pay every debt anyway as part of the Ch. 13 "payment plan". Your credit does not begin the "timeout" until those debts are paid, meaning that bankrupcy has the potential to sit on your credit report hurting you for 15 years.
To sell your home: Paint all neutral colors, get rid of family photos and all clutter, set a price slightly below market value. Make your yard beautiful. Curb appeal sells homes. Keep it clean at all times. And hang in there. Please find another attorney. This one sounds crooked. Best of luck.References :