What to Expect when Filing Bankruptcy Protection?… Mounting credit card bills and monthly payments may take its toll on every debtor in the country. The insistent ringing of your phone and the constant barrage of mails flooding your mail might be signs that you need financial assistance. Although you may have a lot of options available, the only thing that keeps recurring in your mind is bankruptcy protection. Do you know what to expect when filing bankruptcy or do you have no idea about bankruptcy protection?
One of the foremost things a debtor should know is that the federal system does not encourage their citizens from taking the easy way out by filing for bankruptcy right away. Although it does not also discourage, its point is to emphasize that bankruptcy should be a last resort and should involve a lot of thinking and weighing the consequences of your action. Several bankruptcy fraud cases have been encountered in recent years prompting legislators to pass the Bankruptcy Act of 2005 requiring more stringent eligibility and requirements for all bankruptcy protection programs in the country.
The kind of bankruptcy protection offered by the federal court varies from the type of bankruptcy program you are applying for. If you choose Chapter 7, you are assured that your dischargeable debts will be liquidated provided that you pass the criteria for this program. However, you will stand to lose your non-exempt assets, which is one of the stipulations of the program. The court offers each debtor an automatic stay protection. This is imposed to creditors to stop them from further contacting the debtor and prevent them from collecting the debts once the petition has been filed in court.
For Chapter 13 bankruptcy protection, it is the duty of the court to help the debtor repay his debts through a debtor-devised repayment plan. The court will have to approve this plan and even if the creditors will contest because they do not agree with the terms of repayment, the last word will still depend on the bankruptcy judge. The court issues an automatic stay to creditors during the 5-year period that the debtor pays his debts and should there be any remaining debt after the plan has expired this can be discharged by the trustee. The advantage of this bankruptcy protection is that it does not liquidate any of your assets because it gives you a second chance to prove that you are a good debtor.
Before you submit all your requirements in filing for bankruptcy protection, you are required to attend a credit counseling program. This is done in order to orient the debtor on how to handle his money and develop a budget on which he can work around. It’s also one way of protecting debtors from committing the same mistake again.
The purpose of bankruptcy protection is to give debtors the chance of financially starting anew. The decision to file for bankruptcy should not be made hastily and the advantages and disadvantages of your decision should be thoroughly made. Consult a lawyer to make sure that the bankruptcy protection you have chosen is the choice that best applies in your current financial predicament.