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How to File Bankruptcy

Are you confused about how to file bankruptcy? You aren't alone. The new bankruptcy laws enacted in 2005 have created a tremendous amount of confusion and complexity. The Bankruptcy Abuse Prevention and Consumer Protection Act implemented strict rules and regulations, making it difficult to file personal or business bankruptcy. BAPCPA stipulates all debtors must engage in credit counseling prior to petitioning the court for bankruptcy protection.

Understanding the intricacies of how to file bankruptcy generally requires the services of a qualified bankruptcy attorney. While hiring a lawyer is not required by law, few people possess the fortitude to undergo the bankruptcy process on their own. The complexities of BAPCPA could place debtors who file without legal representation at risk for having their petition rejected

Chapter 7 and Chapter 13 are the two personal bankruptcy chapters, while chapters 9, 11, 12 and 15 are typically reserved for businesses or farmers. Chapter 7 requires liquidation of assets to repay creditors. Certain debts cannot be discharged in Chapter 7 including outstanding child or spousal support, taxes owed to the Internal Revenue Service, pending lawsuits, and government funded or guaranteed student loans.

Chapter 13 bankruptcy allows debtors to retain their assets and repay debts over an extended period of time. It is important to note that BAPCPA requires debtors to undergo the 'means' test to determine how much debt they will have to repay. A large portion of disposable income must be contributed toward repayment of debts.

Many people who file Chapter 13 fail out of bankruptcy within the first year. When debtors are unable to adhere to the repayment plan, creditors can petition the court to dismiss the bankruptcy. If this occurs, the bankruptcy judge can elect to allow the debtor to file for Chapter 7 or dismiss the case. If the case is dismissed, debtors no longer have bankruptcy protection and creditors can move forward with collection actions, including foreclosure.

The U.S. Trustee Program provides abundant information on how to file bankruptcy. Debtors who elect to file bankruptcy without legal assistance can obtain necessary forms at

Once the bankruptcy forms are completed, a petition is filed with the bankruptcy court. Shortly thereafter, a 321 Creditor Meeting is arranged. Creditors are allowed to question the debtor as to the circumstances which caused them to file bankruptcy, as well as how they expect to repay outstanding debts. Creditors are not required to attend the meeting. However, if they want their claims to be included in the bankruptcy repayment plan, they must submit their claim within 30 days of the creditor meeting.

Finally, the debtor must appear in front a bankruptcy judge. The judge reviews the case to ensure all requirements have been met and credit counseling has occurred. The judge will either discharge debts through Chapter 7 or Chapter 13, or dismiss the bankruptcy petition altogether.

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Published on October 12, 2008 at 02:15 AM

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