Filing for bankruptcy is a big decision that requires plenty of thought. Sure, It may seem like the easy way out, but with new regulations, filing for bankruptcy is not as easy as it once was. You must realize that your credit report will be affected for the next 7-10 years. Also, getting credit is possible after you file for the court’s protection, but new credit will come at a premium. Once you have made the decision to file, you must take the “Means Test.”
The Means Test
The Means Test is a simple test that basically evaluates your incoming and outgoing income and expenses. A consultation with an skilled bankruptcy lawyer trusts can give you the paperwork you need to start the process, or you can print this test off from the Internet. The government is very generous with expenses, including groceries, car gas, and even entertainment costs. This test must be submitted with all petitions, and the court will not accept the packet without this document.
After you complete the test, it will tell you if you have any disposable income. However, if you are in tune with your bills, you know that there is probably nothing left after you pay them. Still, there are some people who have so much debt they feel like they are drowning, but they actually have the ability to repay some of those debts. This tool helps the court weed out those people who are just trying to get out of paying their bills from those who really have no means to do so. It also tells you if you qualify to file Chapter 7 or Chapter 13.
Credit Counseling
Another newer addition to the bankruptcy process is credit counseling. You must have a certificate of completion to include with your packet. These certificates come from businesses that are certified to work with this government agency. Basically, the credit counselor wants to make sure that you don’t repeat the same bad habits again. They also do another rundown of your expenses and income. They want to make sure that there are no other options outside of bankruptcy for you. The cost of these courses ranges anywhere from $50-$75. However, if you tell them that you don’t have the ability to pay for these classes, many will reduce or waive the fees. It’s a pretty easy process that takes about a half of an hour to complete.
Gathering The Proper Information
After the prerequisites are completed, it’s time to file the petition. It takes some time to fill out all these papers. They will want to check account information, savings, credit cards, secured and unsecured debts, student loans, and any assets you have. It will take some time to gather all this information. It’s a good idea to get a copy of your credit report to make sure you have included all your bills. Once the petition has been accepted, it is hard to get a bill added. Prepare a list of credit accounts with matching account numbers and outstanding amounts.
Filing The Petition
Once your paperwork is in order, it is time to file the petition. If you don’t have the money to pay the filing fees up front, for a Chapter 7 you can pay it over time in installments. If you file a Chapter 13, filing fees are included in the monthly payment plan. It is advisable to have an attorney with you throughout this entire process. The Meeting of Creditors allows any creditors that have issues with your discharge to come and appear against you. Most of the time no one shows up, however, if you have a secured debt or a creditor who wants the bill to stand, they will show.
A Chapter 7 is usually over within six months. When it comes to a Chapter 13, it can take 3-5 years. It’s a long process, but many find that it is worth it to be free of the debt collectors and harassment from unpaid bills.