Have you decided to file for bankruptcy? Doing a little homework makes the process a lot easier. First, gather your paperwork and get organized. The consumer needs to have copies of all debts. Your lawyer will need account numbers, balances and contact information. Credit cards, mortgages, car loans and any other debts should be included. Likewise, the bankruptcy trustee needs proof of income, so it is a good idea to have check stubs for the past year. Further, they will want to see the latest income tax return.
Next, one needs to figure out what is the best bankruptcy for them. A bankruptcy attorney in Cornelius, NC like those at Lake Law, PLLC have guided clients through bankruptcy for years. The most common bankruptcies for individuals are chapters 7 and 13. Individuals must pass a “means test” to file for chapter 7, and in order to do so, the person must not make enough to repay their debt. Rather, the bankruptcy trustee takes the debtor’s property and liquidates it. Finally, the proceeds are divided between the creditors. Certain property is exempt from liquidation including social security income.
On the other hand, people can keep their property when they file for chapter 13; however, they must agree to a three-to-five year repayment plan through which the debtor pays the money each month to the court. In return, the bankruptcy trustee divides the payments between creditors. The downside is the size of the monthly payment. It is a large portion of the person’s disposable income, therefore, there is not a lot of money left over. Shopping and eating out may have to go by the wayside. The bankruptcy attorney in Cornelius, NC works to get clients affordable payments.
Whether one files for a 7 or 13, the court issues an automatic stay, meaning that creditors must stop collection activities immediately. The individual gets a break from threatening letters and phone calls. Also, foreclosure and repossession actions must stop. The main idea behind bankruptcy is to get a fresh start. When the bankruptcy is discharged, the debtor can start over again. The important thing is to learn from mistakes and stay out of debt.
