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How Bankruptcy Works

Finance

How Bankruptcy Works

Wayne Vass February 12, 2019
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Bankruptcy no longer carries the stigma that it used to. It is no longer seen as a sign of failure in life. For the most part, people take a much healthier attitude toward it. If you are drowning in debt, filing for bankruptcy may be the only way to get a lifeline out of it.

Unsustainable debt is not an indication of recklessness or irresponsibility on your part. Circumstances of all kinds may converge to put you in serious debt. You may incur unexpected medical expenses or lose your job without any warning. When this happens, it may become impossible to service the debt you’ve accumulated.

A Way Out

Filing for bankruptcy allows you to make a fresh start. However, there are rules and guidelines that must be followed if you to discharge the debt successfully. You must fill out the forms correctly and meet specific deadlines. A bankruptcy lawyer such as the ones found at dovebankruptcylaw.com can help you do this. Bankruptcy laws are designed to protect ordinary people going through a rough patch from complete destitution. Such laws are nevertheless complex. A bankruptcy attorney can provide you with the expertise and nuance you need to make the law work for you.

Chapter 7 Bankruptcy

Filing for chapter 7 bankruptcy may be the best option for you. Chapter 7 is the complete wiping away of all your unsecured debt. It allows you start clean and fresh financially. Credit cards, utility bills, consumer loans, and certain types of IRS debt are the kinds of debt you can rid yourself of. Home mortgage, student debt, child support, and alimony do not qualify for liquidation.

In most instances, people who file for chapter 7 are not forced to give up or sell their things. However, you will have to disclose all your assets and list all your creditors.

How It Works

You will first have to submit the proper paperwork declaring bankruptcy and asking for legal protection against your creditors. Once the papers are drawn up and verified by your lawyer and signed by you, a date for a meeting of creditors will be designated. You should not expect your creditors to attend. The only people likely to be in the room will be you, your lawyer, and the trustee assigned by the court. The meeting will not last much longer than 30 minutes. Once you have been formally declared bankrupt, you will be under the protection of the law.

This will provide you with the relief you need to begin rebuilding. Your creditors will be legally forbidden from emailing, calling, or otherwise harassing you. If you continue to receive such communication, you should refer the offender to your lawyer who will know how to resolve the matter.

A Fresh Start

The bankruptcy will be on your credit report for the next 5 years. You may find it difficult to get loans or extensions of credit in that time. However, you will get the reprieve you need to start again.

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