Filing for bankruptcy is still under a stigma in American society. Most people don’t realize that the entire bankruptcy procedure is designed to make their lives simpler and their financial future brighter. In this article, bankruptcy law firm experts briefly explain how the current US bankruptcy law works and how it can help you get debt relief or even eliminate the entire debt body.
Filing for Bankruptcy Isn’t That Difficult
Filing for bankruptcy in all states includes three major steps:
- The Means Test – during this standard test, the court figures out whether you can file under Chapter 7 or Chapter 13. Every individual whose income doesn’t exceed the median state income is eligible for Chapter 7 bankruptcy. If it does, extra testing is applied, but Chapter 7 is still possible.
- Collecting Paperwork – you have to gather all the papers that itemize your income, tax returns, and major transactions over the last 2 years, debts, expenses, property, loans, etc.
- Actual filing – once all the paperwork is in one folder, you can analyze it to see what state bankruptcy exemptions apply to your case. This must be done before filing to inform the court of all exemptions you wish to use. The cost of filing for Chapter 7 is $306 (may differ by state and year) and can be paid in installments, while the Chapter 13 fee is $281 (also varies according to state and year).
Mind the Automatic Stay
Once you file for bankruptcy, the Automatic Stay goes into effect. It’s a temporary measure that legally keeps all the creditors away from you and prohibits them from claiming and staking any of your property. This time is used by the court to process your petition. You should also use this time for further preparations with your hired attorney or personally.
You Can Apply for Bankruptcy Exemptions
The list of bankruptcy exemptions may differ by state, but it generally allows you to keep your:
- Motor vehicle
- Household goods
- Tools of trade
- Insurance proceeds
- Miscellaneous property of a business partnership
- Health aids
- Public benefits
Of course, you can keep all of the listed positions only if they don’t exceed the permitted cost limit. You have to contact your local state attorney or research the web to find the current list of available exemptions for your state and check out all the limits. It’s probably the most important stage as it lets you secure your property.
Stand for Your Rights
As you can see now, the US court system does a great job of helping eligible citizens to minimize and eliminate their debts. Still, officials cannot come into your house and offer their services to you. You have to tame your anxiety, contact the local court, or hire a lawyer and go through the procedure at your own will. If you are attentive enough, you will be able to use a large number of exemptions and keep most, if not all, of your property and assets. Good luck!