|
With your bankruptcy attorney in tow and essential
documents in hand, it is now time to file for bankruptcy, which
means filling out a substantial amount of paperwork.
 |
| Bankruptcy timeline |
|
|
|
|
|
|
"There is a petition, schedules showing all assets
and liabilities, a statement of income and expenses, a statement
of affairs -- which attempts to elicit more information about the
debtor's financial affairs -- and in a Chapter 7, a means-test calculation,
a statement of intent concerning secured debt and various disclosures
that the debtor is required to have," says Marc Stern, co-chair
of the Bankruptcy Committee of General Practice solo division of
the American Bar Association.
"A Chapter 13 filing has the same materials,
minus the statement of intent and the means test. Instead, it has
a Chapter 13 plan."
The "Chapter 13 plan" is a repayment plan
that can extend from three to five years. The plan establishes a
set amount that must be given to the trustee appointed to the case
either biweekly or monthly. Also, the Chapter 13 repayment plan
must be filed at the time that the bankruptcy petition is filed
or within 15 days of that.
Chapter 13 bankruptcies are for debtors with regular
income who have unsecured debts less than $307,675 and secured debts
less than $922,975. These numbers are subject to change based on
the Consumer Price Index. If the consumer owes more than those amounts,
he or she has the option to file a different bankruptcy chapter
depending on their debts and income. Consult an attorney to find
out.
If employed, the debtor must provide to the court
evidence of 60 days of income from their employer -- for example,
check stubs.
Once the petition is filed, collectors can no longer
take action against the debtor or the debtors' property, creating
an "automatic stay." This stay can only be for a short
period of time, but will vary. A Chapter 13 bankruptcy also has
a "co-debtor stay." This can stop creditors from trying
to collect from someone else who might have some responsibility
for the debt, for instance, the co-signer on a loan.
Rebuilding your credit
According to the Mortgage Bankers Association's Home Loan Learning
Center, it is possible to start rebuilding your credit even while
you're filing bankruptcy. The center suggests keeping one credit
card account open when you file.
Kevin Chern, president of StartFreshToday Inc., a
research resource for bankruptcy lawyers, explains how this can
be done:
"If you have no outstanding balance on an account,
you are not required to list the account in your bankruptcy filing
and the creditor won't be notified directly of your bankruptcy.
Sometimes, a lender will allow a zero-balance account to remain
open. Even if you have a small balance that you pay each month,
some lenders will allow you to keep the account if you keep it current.
"Obviously, you should consult with your attorney
as to whether you can afford to maintain the debt payment. Also,
if the creditor wants you to sign a reaffirmation agreement, under
the new law, your attorney also has to agree that maintaining the
debt is not an undue hardship on you."
|
