The Bankruptcy Process

What You Can Expect During a Bankruptcy Filing

Bankruptcy is a legal action designed for those who cannot pay off their debts.

It is often sought by individuals due to difficult circumstances such as:

• An illness
• Accident
• Job loss
• Divorce
• Or other circumstances that contribute to significant debt

If you are drowning in debt, bankruptcy may be the right solution for you. As your Worcester bankruptcy attorney, I can help you understand the legal options available to you and begin the bankruptcy process should it be appropriate.

The timeline of what will occur will then be based on the type of bankruptcy you seek.

What Are the Steps Taken in Bankruptcy?

The first step in the bankruptcy process is to go through credit counseling with an approved agency six months prior to filing. You will also have to complete a financial management course after filing.

The next step will be to take the means test to determine your eligibility for Chapter 7. If you do not qualify, you will need to file for Chapter 13 bankruptcy.

You will need to gather all of the financial information needed by the court, such as:

• Your income sources
• Major financial expenditures in the last two years
• Your monthly expenses
• Your secured and unsecured debts
• Your assets and property

You will then be able to determine what property is exempt from liquidation in a Chapter 7 filing. For a Chapter 13 filing, you will need to create a repayment plan that must be submitted to the court.

This plan will allow you to pay creditors over a three- or five-year period. Once you have filed, you will then be protected by an automatic stay from the court that will prohibit your creditors from contacting you for payment.

In Chapter 7, a trustee will be appointed to handle your case. The trustee will arrange for a meeting of your creditors which you will attend.

Any non-exempt property will then be liquidated to pay off your creditors. Once that occurs, the remainder of your debt will be discharged. This process takes about three to six months.

In Chapter 13, if your repayment plan is accepted by the court, you will then begin making the payment each month until you have fulfilled the plan terms. At the end of the term, whatever remains of your debt will be discharged. This process generally takes three to five years.