If you are struggling with debt and feeling overwhelmed, you may want to meet with an experienced bankruptcy attorney to review your case and discuss your options. If individual bankruptcy is something that you may need to consider you may want to know the basic process. Let’s look at the steps in the bankruptcy process for individuals.
- Credit Counseling – The 2005 Bankruptcy Act requires that a debtor undergo credit counseling within 6 months of filing in order to review alternatives to bankruptcy. This financial evaluation should be done through a government approved organization.
- Bankruptcy Means Test – This allows the court to look at your average income for the months prior to filing and compare it to the median income to see whether you qualify for Chapter 7 bankruptcy (total bankruptcy) or Chapter 13 (re-organizational bankruptcy).
- Paperwork Gathering- This means that you must acquire the paperwork for major transactions for the past two years. This includes: living expenses, debts, property, and all assets. Paperwork may include: deeds, bills, tax returns, car titles, and loan documents.
- Filing- To actually file, you or your attorney will submit a petition with the Massachusetts District Bankruptcy Court. The judge will examine all documents and determine the outcome of the petition.
- Automatic Stay – Once you have filed the petition, an automatic stay will prevent: creditors from making contact with you, repossession of property and eviction. This also halts foreclosure proceedings, wage garnishments and IRS collection activities.
- Bankruptcy Trustee – The court will take control of your debt and assign you a Trustee to deal with your case. Depending upon whether it is Chapter 7 or 13 that you petitioned for, they will work with you to decide what needs to be repaid and review your paperwork.
- Meeting of Creditors- A month or two after the filing, you will be called to meet with your trustee and your creditors to discuss property that is not exempt. Creditors can also question the legitimacy of the plan at this time.
- Debtor Education – Before your debts can be discharged you must complete a debtor education course where you can develop a budget, learn to manage your money and how to use credit wisely.