Cómo Y Cuándo Declarar Bancarrota

There are times where you might feel like all your money disappears thanks to the debts that are accumulated day by day. Utility bills, taxes, loans, mortgages, and list goes on and on. With empty pockets and a lot of stress start considering bankruptcy as an option for your financial life. Bankruptcy laws are meant to offer relief and a “fresh start” to those who have too many debts due. Of course, there are other alternatives to consider before taking such important decision since this one has many consequences; probably the most important one is that it will appear in your credit report for a period of more or less 10 years. In fact, some debts like student loans and taxes cannot be solved through bankruptcy; however, most of the people that choose to apply for it solve other types of debts.

Although bankruptcy is a great choice for some people, is not something to take lightly, applying for bankruptcy means you got to the point of no return where your finances and expenses were not assumable anymore. Applying for bankruptcy should never be seen as something you “can do” to get out of trouble, and most people don’t really get this and after they filed once they tend to do it again, which basically shows that you didn’t learn your lesson the first time.

“Bankruptcy laws are meant to offer relief and a ‘fresh start’ to those who have too many debts due”

This application for bankruptcy is also an expensive process, it is a legal process that needs to be consulted with a lawyer who knows how to handle the subject and he of course needs to be paid for his services. The better your lawyer is the better you’ll do on your trial and the clearer your accounts will be for you to manage afterwards.

For individuals and companies there are different types of bankruptcies called “Chapters”. The 2 most common are Chapter 7 and Chapter 13.Although the process to apply for bankruptcy is governed by the United States Courts, each state has certain particularities regarding the process and its outcomes. Later we will give some detailed information regarding the process to apply for a bankruptcy case.

Let’s start with when is it that you should apply.

The “when” varies from person to person since everyone’s situation is different. The idea is that a person who wants to file a bankruptcy case has already tried other less extremist options such as: financial coaching, credit counseling, negotiating with creditors, credit card consolidation, loan modification, or loan refinancing. If those alternatives did not work and your situation is still the same –or worse-, then you can think of Bankruptcy as an option.

Other signs that show your financial decline are: using your credit cards way too much, taking money out of your retirement accounts, when your monthly income is not enough, or if your total amount of debts just keeps rising.

Read also: Understanding Bankruptcy

Now that you know when,you need to know how to apply.

Depending on whether you are filing for a Chapter 7 or Chapter 13 Bankruptcy case, the list of requirement may vary, but at first, they are the same. Notice that the very first thing you have to do is hire an attorney that can offer help and assist you throughout your case; you could do it be yourself, BUT it is not recommended because it is a complex, time-consuming process that is better off in the hands of someone with the competences to do so.

According to the U.S. Courts, to begin, a debtor must fill out a petition with the bankruptcy court servicing in his or her area. The Forms may be purchased atlegal stationery stores or downloadedon line.

Additionally to the petition, the debtor must also file:

  • Schedules of assets and liabilities
  • A statement of financial affairs
  • A schedule of current income and expenditures
  • Evidence of payment from employers, if any, received 60 days before filing.
  • A statement of monthly net income and any anticipated increase in income or expenses after filing
  • A list of all of the debtor’s property
  • The source, amount, and frequency of the debtor’s income
  • Others

Specifically for debtors applying for a Chapter 7 case, he or she must file also:

  • A schedule of «exempt» property.

During subsequent meetings, the trustee puts the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding their financial affairs and property.

Specifically for debtors applying for a Chapter 13 case, he or she must organize with the trustee a repayment plan, which will be taken to court for a hearing after a meeting with the creditors. Here, accuracy and completeness are the keys to a successful process.

Institutions who offer credit counseling like we do at Premier Consumer can’t really take care of your process or give you legal advice about it, but we can help you get out of debt and consolidate the payments of your multiple debts into a single monthly payment to make your life and finances easier to handle. Our Debt Management Program can help you manage your debt so you don’t have to apply for bankruptcy, consult these options before filing for being bankrupt.

Additionally to those requirements, the debtors must pay a $245 case filing fee, a $75 miscellaneous administrative fee, and a $15 trustee surcharge when it is a Chapter 7 case; for Chapter 13 cases the debtors must pay a $235 case filing fee and a $75 miscellaneous administrative fee.With the court’s permission, individual debtors may pay in4 installments. The time given by the court to pay the installments is between 120 to 180 days.

Debtors should be aware that failure to pay these fees, lack of cooperation with the trustee and hide of financial records or legal documentsmay result in dismissal of the case.

Read also: 10 Symptoms That You Are Over Your Head In Debt.

Filing a petition under chapter 7 or chapter 13 provides the debtor an «automaticstay» that stops most collection actions against the debtor or his / her propertysuch as: impossibility to initiate or continue lawsuits, wage garnishments, or telephone calls from collectors. However, any debtor in a Chapter 13 case may still lose the home if he or she fails to make the regular payments settled after the chapter 13 filing and payment agreement.

Having said that, filing for bankruptcy is a complex process that should not be underestimated, and it is mostly recommended when no other solution is possible or available.

If you find yourself in this situation, we suggest you to find financial assistance so you can solve your debts and avoid future problems.