Immediately following the outbreak of COVID-19 in the United States, the unemployment rate spiked. While many are beginning to return to work, the damage done might have you considering bankruptcy. Here are the steps to take in order to go through the bankruptcy process:
- Hire a Bankruptcy Lawyer
Hiring a lawyer to assist you is one of the most important steps in successfully filing bankruptcy and avoiding legal consequences. To find a bankruptcy lawyer with a good reputation and plenty of experience, contact your local bar association.
- Analyze Your Debt
You and your lawyer need to determine which debts are not dischargeable (child support/alimony, student loans, tax debt, etc.), which debts are secured or unsecured, and which debts you may have pledged collateral for (house, car, etc.). If you are thinking about filing Chapter 7, you’ll need to take the means test to see if you qualify. This analysis will likely lead to your decision to file a Chapter 7 or Chapter 13 bankruptcy.
- Credit Counseling
Before you file for bankruptcy, the Federal Bankruptcy Code requires you to undergo credit counseling. You’ll need to confirm that the credit counseling agency you use is approved by the U.S. Trustee Program through the U.S. Department of Justice. An experienced bankruptcy lawyer will also be able to recommend an approved credit counseling agency.
- Complete the Bankruptcy Petition
This step is often the most time-consuming. Your lawyer will do a lot of the leg work in completing the bankruptcy petition, but you will need to provide all the documentation to support the petition. Paperwork will be needed to document your:
- Assets
- Debts
- Income & pay stubs
- Living expenses
- Recent tax returns
- Certificate of completion of credit counseling
- Copy of the debt repayment plan created by the credit counselor
Once the petition is filed, a hearing will be set.
- Bankruptcy Hearing
Also known as the “341 hearing” or “meeting of creditors,” this is when you will meet the trustee appointed to oversee your case. The trustee will verify your identification and ask you questions about the bankruptcy petition. Creditors can also attend and ask questions, though it is rare for them to do so.
- Liquidation or Repayment
Next, if you filed a Chapter 7, any non-exempt property will be liquidated to pay off your debts. If you filed a Chapter 13, your repayment plan will begin, and it will be up to you to make sure you stick to it.
- Discharge
The manner in which your bankruptcy is discharged will also depend on which type of bankruptcy you filed. In a Chapter 7, your remaining debts will be discharged once your trustee has sold all nonexempt assets and pays out the creditor claims. Before the court discharges a Chapter 13, you will be required to complete a personal management course.
Contact an Attorney
If you are thinking of filing for bankruptcy, call a lawyer, for an initial consultation with an experienced bankruptcy attorney.
Call 434-817-3100 or complete a Case Evaluation form
