The bankruptcy process can be complicated and involves coordination between the person seeking bankruptcy, their lawyer, creditors and bankruptcy courts. That is why it is important to hire an experienced bankruptcy attorney like MAUI Bankruptcy Attorney who can help and guide people by filing bankruptcy throughout the entire process. Whether the individual chose to pursue Chapter 13 bankruptcy or was qualified to opt for Chapter 7 bankruptcy, there are several steps that must be taken before making the formal filing. There are several significant milestones that one can expect after the presentation.
Planning for bankruptcy
There are several financial signs indicating that an individual may find themselves needing to file for bankruptcy in the near future, such as:
Reach the minimum payment of your credit cards while carrying one or more extraordinary balances
- Fail to make payments by credit cards or other loans
- Be rejected when requesting a loan or credit card
- Not being able to buy health insurance
Failure to maintain an emergency fund
Those who have experienced two or more of these financial events should begin to familiarize themselves with the bankruptcy process.
There are some things that those who are looking for bankruptcy should take care of before their formal filing. People considering bankruptcy should start collecting essential documents about two weeks before filing. Important documents include a list of assets and debts, a list of names and addresses of creditors, bank summaries, salary or payroll receipts, orders for alimony and pension for minor children, vehicle titles and mortgage and rent documentation.
Those who plan to file for bankruptcy in either Chapter 13 or Chapter 7 must also complete credit counseling in the 180 days prior to filing. Credit counseling is required by the bankruptcy code and generally costs $ 50, lasts around 90 minutes and can be done in person, by phone or online.
Determining the eligibility for bankruptcy of Chapter 13 or Chapter 7
After hiring a lawyer, collecting documentation and completing credit counseling, individuals must establish their eligibility for Chapter 13 or Chapter 7 bankruptcy.
Chapter 13 bankruptcy also known as a salary plan, allows individuals with limited debts to develop repayment bread with creditors. The plan lasts from three to five years, after which the remaining debts are discharged. To qualify for Chapter 13 bankruptcy, people must have unsecured debts, which include credit card debts, below $ 360,475 and insured debts, such as a mortgage or car plan, below $ 1,081. 400 Those filing for a Chapter 13 bankruptcy must also pass a media test.
The bankruptcy of Chapter 7 settles the debts of the applicant and the intention is to allow him to reach a new beginning from scratch. When debts are canceled under Chapter 7, the person is no longer obligated to pay their creditors. However, those who are eligible for Chapter 7 may sometimes have to surrender some personal property.
Life after bankruptcy: what to expect
Fortunately, rebuilding financial stability after bankruptcy can occur as soon as six months, depending on the type of bankruptcy the person was able to access. Those who file for Chapter 7 bankruptcy can file for secured credit, perhaps within six months, the point at which their debts have been canceled. At 18 months, those who went through Chapter 7 may be able to apply for an unsecured credit card. Between 18 and 24 months, those who filed for bankruptcy, either Chapter 7 or Chapter 13 may apply for a mortgage.
The next milestone is three years after bankruptcy, at which time those who filed for Chapter 13 bankruptcy may begin to have their remaining debts canceled. At this point, they may be able to reapply for a secured card. Between seven and ten years after filing, bankruptcies of Chapter 7 or Chapter 13 can be eliminated from the credit reports.
Filing for bankruptcy leaves a mark on the individual’s life for years after the payment or cancellation of their debts, but the freedom that bankruptcy grants to those burdened by debts can transform the process into something desirable. If you are considering bankruptcy, please contact an experienced bankruptcy attorney like MAUI Bankruptcy Attorney.