Counseling And Education Requirements
Pre-bankruptcy credit counseling and pre-discharge debtor education may not be provided at the same time. Credit counseling must take place before you file for bankruptcy debtor education must take place after you file.
You must file a certificate of credit counseling completion when you file for bankruptcy, and evidence of completion of debtor education after you file for bankruptcy but before your debts are discharged. Only credit counseling organizations and debtor education course providers that have been approved by the U.S. Trustee Program may issue these certificates. To protect against fraud, the certificates are numbered, and produced through a central automated system.
Student Loan Hardship Options
Bankruptcy wont discharge student loan debt. However, there are options to make your payments more manageable.
Borrowers with federal student loans can choose to pursue deferment or forbearance for up to three years total. Depending on the type of student loans you have and the type of relief you choose, interest may still accrue during this time. Through Sept. 30, 2021, all federally owned student loans are automatically under forbearance with no interest accrual.
Neither deferment or forbearance will impact your credit score, but both will be noted on your credit report.
Another option for federal borrowers is to switch to an income-driven repayment plan with a loan forgiveness option. This will extend your repayment timeline, but because the plan bases your student loan payments on your actual income, your monthly payment may be as low as $0. The good news with this approach is that there is no credit check required to initiate an income-driven repayment plan and it will not impact your credit score.
If you have private student loans, you may still be eligible for deferment or forbearance options. This depends on the lender if youre facing financial hardship, call your lender and ask about your options. Deferment programs through private lenders may impact your credit score.
Will A Bankruptcy Actually Resolve My Debts
Bankruptcy does not resolve all debt indiscriminately. Some debts, such as student loans, cannot be discharged in bankruptcy. If you’re having trouble making payments toward debts that bankruptcy won’t cover, you should speak with your creditors to determine your options.
About the Author
Read Also: Mystery Pallets For Sale
Fill Out And File The Forms
This part is tedious and leads to the majority of bankruptcy filing mistakes. While you can fill out the forms yourself, the answers you give can have an impact on other parts of the form and wrong answers can eliminate legal protections. All the forms are online and all you need do is print them out, fill out the required information, and mail them to the court. Find your local court by searching the U.S. Federal Court Finder. But the best advice is to never complete the bankruptcy process yourself. Hire a bankruptcy attorney that is a legal expert in what the rules are, how to best complete the forms, understands the local procedures and process, and is your legal representative.
Once you file, you are granted an automatic stay from further legal action and collection efforts. This means that once you have informed your creditors and collectors, they can no longer call you about the accounts included in your bankruptcy filing. It also stops all collection suits and foreclosures.
Consult A Bankruptcy Attorney
While youre allowed to represent yourself when filing for bankruptcy aka filing pro se we suggest consulting an experienced bankruptcy attorney in your area.
Research shows that legal aid will drastically increase your cases chances of a favorable outcome. Usually, this means receiving a bankruptcy discharge, which is a court order that wipes away your liability for some or all the debts you cant repay.
According to the American Bankruptcy Institute, less than half of people who represent themselves in a Chapter 7 Bankruptcy case receive a discharge. With a bankruptcy lawyer? About 94% are successful in getting a discharge. Plus, Chapter 7 is the easier option of the two main forms of bankruptcy for individuals to represent themselves. The stats for the other main type, Chapter 13, are even worse for pro se filers.
Suffice it to say, speak with a lawyer or two near you whos experienced with bankruptcy law. Here are a few resources to find them:
- Your state or citys Bar Association
- National Association of Consumer Bankruptcy Attorneys
- Legal Services Corporation, a non-profit legal aid source for low-income Americans
Its understandable that you might be hesitant to pay for an attorney when youre already under considerable financial pressure. The good news is that you may qualify for free legal aid, either at one of the organizations listed above or at another local organization.
Many attorneys also offer free consultations or email Q& As. Take advantage of that.
Read Also: How To Build My Credit After Bankruptcy
What Happens When You File For Bankruptcy
If you’ve found yourself in the unfortunate position of not being able to keep up with your bills, and disputing your debts with a debt verification letter or a 609 letter hasn’t worked, you may need to consider filing for bankruptcy.
Before you do that, though, it’s important to make sure that you know what happens when you file for bankruptcy. That way, you can decide whether bankruptcy really is the right choice for you. After all, whether you’re considering Chapter 7 or Chapter 13, it’s clear that filing for bankruptcy isn’t something to take lightly.
Because filing for bankruptcy is such a serious matter, you’ll want to make sure you have the facts. Read on to learn more about what bankruptcy is, how it works, and how DoNotPay can help simplify the process for you.
How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
At Bankrate we strive to help you make smarter financial decisions. While we adhere to stricteditorial integrity,this post may contain references to products from our partners.Heres an explanation forhow we make money.
Also Check: Why Did The Boy Scouts File For Bankruptcy
Is Chapter 7 Bankruptcy Right For You
Make sure you know the difference between Chapter 7 bankruptcy vs Chapter 13 bankruptcy. Chapter 7 makes sense when:
-
You dont have many assets.
-
Your problem debts total more than 50% of your annual income.
-
Your problem debts can be discharged, or forgiven, by Chapter 7. These include debts such as medical bills, credit card debt and personal or payday loans.
-
It would take five years or more to pay off your debt, even if you took extreme measures.
Some debts typically cant be erased in bankruptcy, including recent taxes, child support and student loans. Bankruptcy still may be an option for you, though, if erasing other kinds of debt would free up enough money to pay the debts that cant be erased.
The other common form of consumer bankruptcy, Chapter 13, may be better if you have more assets or secured debts, and can repay some or all of what you owe.
Other debt relief options are available, too, such as a debt management plan through a agency. Take advantage of the free initial advice that credit counselors and many bankruptcy attorneys offer before deciding on a path.
Licensed Insolvency Trustee In Richmond Hill
You are probably familiar with the term bankruptcy trustee, but now the proper term is Licensed Insolvency Trustee, because trustees provide much more services than simply bankruptcy.
When you meet with a licensed insolvency trustee we will help you review your financial situation and help you choose the right plan on getting out of debt.
Personal bankruptcy in Richmond Hill can take as little as 9 months, at which time you will get your bankruptcy discharge.
The discharge from bankruptcy in Richmond Hill is what eliminates your unsecured debts.
During the bankruptcy process, you must complete several bankruptcy duties, and make the required monthly payments.
In addition, you will receive two credit counselling sessions with your trustee, which will help you budget and manage your money successfully in the future.
If you are trapped in credit card debt, claiming bankruptcy can give you a fresh start.
You must complete all your duties as a bankrupt in order to receive your discharge.
Read Also: Average Cost Of Bankruptcy
How To File For Bankruptcy: A Step
Bankruptcy is governed by the United States Bankruptcy Code, a federal statute, so the process is very similar in any of the 90 federal bankruptcy courts nationwide. However, there may be local variations, and every case is different, so this guide serves as only a general outline of the bankruptcy process.
Filing Without An Attorney
Individuals can file bankruptcy without an attorney, which is called filing pro se. However, seeking the advice of a qualified attorney is strongly recommended because bankruptcy has long-term financial and legal outcomes.
Filing personal bankruptcy under Chapter 7 or Chapter 13 takes careful preparation and understanding of legal issues. Misunderstandings of the law or making mistakes in the process can affect your rights. Court employees and bankruptcy judges are prohibited by law from offering legal advice.
The following is a list of ways your lawyer can help you with your case.
- Advise you on whether to file a bankruptcy petition.
- Advise you under which chapter to file.
- Advise you on whether your debts can be discharged.
- Advise you on whether or not you will be able to keep your home, car, or other property after you file.
- Advise you of the tax consequences of filing.
- Advise you on whether you should continue to pay creditors.
- Explain bankruptcy law and procedures to you.
- Help you complete and file forms.
- Assist you with most aspects of your bankruptcy case.
Bankruptcy Forms are available to the public free of charge.
- Use the forms that are numbered in the 100 series to file bankruptcy for individuals or married couples.
- Use the forms that are numbered in the 200 series if you are preparing a bankruptcy on behalf of a nonindividual, such as a corporation, partnership, or limited liability company .
- Sole proprietors must use the forms that are numbered in the 100 series.
Read Also: Overstock Phone Number For Orders
Where To File If You Moved Recently
If you moved within the last 180 days, the proper place to file your bankruptcy case is the location where you lived for the greater part of the 180 days. For example, if you lived in California for the last few years, but moved to Arizona two months ago, California is still the proper location for your bankruptcy because it was where you lived for 120 days of the 180-day period before the filing.
What Happens When Declaring Bankruptcy
If you find yourself struggling to pay your bills and facing the prospect of losing everything, you may have no choice but to file for bankruptcy. One of the most important things that happen immediately upon filing for bankruptcy is that an automatic stay is placed on any debt collection attempts that you are dealing with.
This means that the harassing phone calls and letters you’ve been receiving from mortgage companies, credit card companies, debt collectors, and others should stop immediately. They are to refrain from contacting you while the bankruptcy process is sorted out. In addition, wages cannot be garnished, and no money can be deducted from your bank account.
Also Check: How Long Will Chapter 7 Bankruptcy Stay On Credit Report
Complete The Debtor Counseling Course
Before your debt can be officially discharged, you must complete a debtor counseling course, similar to the course you had to complete before you filed.
The providers of this course must also be approved by the Department of Justice .
You typically can find the debtor education course at a cheaper price than the first course. For example, one approved provider offers the course online for as low as $7.95. Some providers will offer to file your completion certificate directly with your local court. Whether you go that direction or file it yourself, complete this step ASAP to speed up the discharge process.
Hiring A Competent Bankruptcy Attorney Like The Pope Firm
Hiring a bankruptcy attorney is a great idea for the court filing process, but some third parties can offer assistance in other areas, like a bankruptcy petition preparer. However, a petition preparer is not a legal professional who is qualified to advise or represent you. They will not be able to guide you through the process, online or in person.
These services will be able to type your petition for you in the correct format, but you will need to submit your bankruptcy case petitions to the federal courts and attend court hearings yourself. This somewhat defeats the purpose of filing for bankruptcy on the internet, but there are many steps that do benefit from online preparation.
In contrast, a certified law firm can prepare any required documents and forms for you and walk you through the entire process. Their professionals are capable of offering legal advice about filing bankruptcy online, and they honor the attorney-client relationship. Your legal professional may even submit your case to the bankruptcy law courts without you ever needing to leave your home.
Filing with the bankruptcy courts often comes with filing fees that youll need to handle, and our attorney team will help you navigate this part of the process.
Recommended Reading: Does Filing Bankruptcy Clear Your Credit
Frequently Asked Questions Consumer Information
The United States Trustee Program is prohibited from providing legal advice to private individuals. These questions and answers relate to general circumstances involving bankruptcy.
The FAQs are separated into the following major areas of interest:
Questions
: May 2010
: May 2010
Bankruptcy Trustees
Q: Does the trustee represent me in my chapter 7, chapter 12, or chapter 13 case?
: May 2010
: May 2010
Bankruptcy Proceedings
: May 2010
Homeowners Concerns
: May 2010
Q: How is the bankruptcy system used in marijuana cases?
Added: April 2017
Added: April 2017
Added: April 2017
Same-Sex Married Couples in Bankruptcy
Added: February 2014
Added: February 2014
Added: February 2014
How Does Bankruptcy Affect Assets And Liabilities
Depending on how you choose to declare bankruptcy, your assets and liabilities will be affected in different ways. In a Chapter 7 bankruptcy, many of your assets are up for liquidation to pay your creditors with the proceeds. In Chapter 13, you retain assets while working on a repayment plan for your outstanding debts.
See how bankruptcy affects assets and debts in the following debtee categories.
Small Business Owners
For small business owners with lots of personal debt, bankruptcy may help them continue to stay in business. It’s important to note that business debts aren’t alleviated with Chapter 7 or Chapter 13 unless you’re a sole proprietor and are personally responsible for them.
- Chapter 7: For sole proprietors, business and personal debts can be wiped out in a single bankruptcy case. You’re not obligated to meet income requirements if your business debt exceeds your personal debt.
- Chapter 13: Your business assets aren’t liquidated, but only your personal liability for business debts can be wiped out. The business remains responsible for its debts.
Some business assets can be exempt from Chapter 7 bankruptcy filings. For instance, if your business is service-based and doesn’t maintain equipment or significant inventory, you can likely continue to run your business after discharging business debts through bankruptcy.
Student Loan Holders
Mortgage Holders
You May Like: What Is Dti For Mortgage
Choosing A Credit Counselor
If youre looking for credit counseling to fulfill the bankruptcy law requirements, make sure you receive services only from approved providers for your judicial district. Check the list of approved credit counseling providers online or at the bankruptcy clerks office for the district where you will file. Once you have the list of approved organizations, call several to gather information before you pick one. Some key questions to ask are:
- What services do you offer?
- Will you help me develop a plan for avoiding problems in the future?
- What are your fees?
- What if I cant afford your fees?
- What qualifications do your counselors have? Are they accredited or certified by an outside organization? What training do they receive?
- How do you keep information about me confidential and secure?
- How are your employees paid? Are they paid more if I sign up for certain services, if I pay a fee, or if I make a contribution to your organization?
Waivers And Installment Payments
If you can’t afford to pay the whole filing fee at once, you can ask the court to allow you to pay in installments. You make this request by filing Application for Individuals to Pay the Filing Fee in Installments You can ask to pay in up to four installments, with the final installment due no later than 120 days after you file your bankruptcy petition. The court can extend this deadline by 60 days if you have a good reason, but your case may be dismissed if you haven’t paid the full fee by 180 days after you initially file the petition.
If you plan to file for Chapter 7 bankruptcy, you can ask the court to waive the fee altogether by filing Application to Have the Chapter 7 Filing Fee Waived. To complete the form, you’ll have to provide detailed information about your income, expenses, and other financial matters.
You can’t apply for a fee waiver in a Chapter 13 bankruptcy case. In Chapter 13, you have to repay your debts over time by coming up with a repayment plan and making monthly payments that the trustee will distribute among your creditors. If you can’t come up with the filing fee, the court is unlikely to believe that you’ll be able to make your required plan payments.
Don’t Miss: When You Declare Bankruptcy You Are Said To Be Insolvent
