Bankrupt- now what? Steps to follow when declared bankrupt
If you have filed for bankruptcy, it’s imperative to be prepared for the process. You must know that it doesn’t come cheap and that it should be regarded as a final option. It won’t necessarily wipe all debt obligations out. A means test will be conducted to assess your income eligibility.
A prerequisite of filing is to undergo credit counselling.
You should enlist the assistance of an experienced legal pro and they’ll ensure your creditors are paid what’s due to them.
When you have been declared bankrupt, you get an automatic stay, so your creditors are blacked from harassing you. This prevents your wages from being garnished while secured assets are protected.
You will also meet with your bankruptcy trustee and any creditors interested in attending. Following this, a decision will be made about liquidation.
If you own property, it will be exempt. The same can’t be said for your other assets however. If you have money in your bank account it may be exempt in some cases. Your attorney will advise here.
A Chapter 7 filing is generally quick, while a Chapter 13 filing can lead to a process that lasts up to five years. With the latter, you get a restructured plan based on your income as well as how much you are owing.
For a Chapter 11 business filing, operations may continue, but major financial decisions have to be run by the bankruptcy court. Creditors may offer input on these decisions. This filing lasts anywhere between half a year and two years.
Following being declared bankrupt, most debts are discharged and your credit score will plummet. There are ways to recover and the sooner you start changing financial behaviour, the better.