There is more fear, misinformation and consternation around Bankruptcy than any other area of the law. The fact is, many people wait too long and spend way too much money before chosing to seek the protection of a Bankruptcy filing. Upon filing, the Bankruptcy court cloaks the Debtor in the protection of the Automatic Stay, ceasing all harassing collection attempts and shutting down pending legal proceedings.
Individuals may seek Chapter 7 protection, which quickly eliminates your debts while protecting most, if not all of your possessions. I can get the court to discharge most debts in about four months and do it for a reasonable flat fee.
Chapter 13 proceedings take longer, but creditors don't necessarily get any more than in a Chapter 7 proceeding. Chapter 13 protection is available to Debtors who may have very large incomes and not be eligible for Chapter 7. One key aspect to a Chapter 13 filing is the ability to "cram down" unsecured second mortgages on real estate. This amounts to a forced Loan Modification.
Steps in a Bankruptcy Filing
Before you can file bankruptcy there are a number of steps you must take. Note that in emergency situations, a de minimis filing, known as a skeleton filing, can be made. In most situations, however, it is desirable to have a complete package of information for me to file.
This will include:
1) The last two years of tax returns;
2) Payment Stubs on all income from the Debtor and spouse for the last six months;
3) A Certificate of Completion of the legally required Pre-Petition Credit Counseling;
4) A list of all creditors with a recent Credit Report.
After gathering this information, there is a consultation with the client to determine eligibilty, the best way to utilize Exemptions to protect the client's assets or other issues specific to the client's circumstances.
Once filed, the Automatic Stay will go into effect, all creditors will be notifed and a meeting with the Bankruptcy Trustee will be scheduled. The Debtor must complete the post filing requirement for credit counseling with 60 days of the scheduled meeting.
At the meeting, the Debtor will be questioned as to the accuracy and truthfulness of the forms provided. In most cases, this is a very breif meeting. Within about 60 days, absent extraordinary circumstances, the case is ended with the discharge of debts.