What happens when you file for bankruptcy

When you find yourself in a financial predicament, filing for bankruptcy can be a viable solution to eliminate debt and restore financial stability. However, the process can be complex and confusing, which is why it’s beneficial to engage the services of an attorney. In this article, we’ll explore what happens when you file for bankruptcy with the services of an attorney, such as those at the Liviakis Law Firm.

Firstly, the bankruptcy attorney will help you understand the different types of bankruptcy available and advise you on the most suitable course of action based on your situation. Chapter 7 and Chapter 13 are the most common types of bankruptcy. Chapter 7, also known as “liquidation bankruptcy,” involves the selling of non-exempt assets to pay off creditors. On the other hand, Chapter 13 or “reorganization bankruptcy” allows debtors with a regular income to develop a plan to repay all or part of their debts over a period of three to five years.

Once you’ve made a decision on the type of bankruptcy to file, the next step involves preparing and filing the necessary paperwork. This includes a petition, schedules, and a statement of financial affairs. The attorney will help you gather all the required information and ensure all forms are correctly filled out and filed. Incorrect or incomplete filing can lead to the case being dismissed or can result in you unintentionally committing bankruptcy fraud, which can have severe consequences.

After filing, an automatic stay goes into effect, prohibiting most creditors from continuing with collection actions against you. This means that creditors cannot call you, sue you, or send you letters demanding payment. This stay provides you with a breather, allowing you to work out a plan to repay or discharge your debts.

Subsequently, a bankruptcy trustee will be assigned to your case. The trustee’s role is to represent the creditors’ interests and ensure they receive as much payment as possible. The trustee will review your paperwork, may sell your non-exempt property, and, in a Chapter 13 case, oversee your repayment plan. Your attorney will be present during any meetings with the trustee to protect your interests.

Approximately a month after filing, you’ll be required to attend a meeting of creditors, also known as a 341 meeting. During this meeting, the trustee will ask you questions about your bankruptcy and financial situation. Creditors may also attend, but it’s not common. Your attorney will prepare you for this meeting and attend with you.

Finally, if everything goes as planned, the court will issue a discharge of debts. This is the goal of bankruptcy filing, and it means that you’re no longer legally required to pay any debts that are discharged. The time frame varies depending on the type of bankruptcy filed.

In conclusion, filing for bankruptcy with an attorney ensures that you navigate through the process correctly and efficiently. It gives you the best chance at a fresh financial start. If you’re considering filing for bankruptcy, contact the Liviakis Law Firm at 916 459 2364 for assistance.