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Filing Bankruptcy

What to Expect When Filing Bankruptcy

Filing for bankruptcy is a complex process, and one which is often misunderstood by business and individual filers alike. Bankruptcy can see a person through times of financial hardship, but the benefits can only be reaped if the filer fully grasps the process.

The Best Plan for You

There is no “one-size-fits-all” bankruptcy. Before filing, the debtor will need to determine which chapter is the best fit for his/her unique situation. The advice of a West Palm Beach bankruptcy attorney will be critical in selecting the appropriate type of bankruptcy.

Chapter 7  and Chapter 13 are ideal for individuals, and which chapter is the best fit will depend on that person’s preference for how to pay off his debt. With Chapter 7, assets can be liquidated to pay off the debt, or perhaps a portion of it. Chapter 13, however, involves a pre-determined payment plan that requires debts to be paid over the next three to five years. For business filers, Chapter 11 is usually advisable. With this type of bankruptcy, the company will be reorganized or restructured to facilitate repayment.

You Will Have to Take the Necessary Steps

First and foremost, it is important that filers understand that they will have to front some fees to begin the bankruptcy process. These will include a filing fee, which can range from a few hundred dollars to $2 thousand, attorneys fees, and costs for mandatory credit counseling sessions. You will be required to attend two credit counseling sessions, one before filing and one before discharge is granted. You must file your bankruptcy within 180 days of completing your first session.

During the bankruptcy process, debts are placed in an “automatic stay,” which means creditors are not able to collect on them. This allows time for a repayment method to be figured out without causing the filer further financial distress. From there, the courtroom proceedings will begin with the first meeting of creditors. During this meeting, creditors and the trustee  will have the opportunity to question the debtor under oath about assets and liabilities. Within 60 days of this meeting, the creditors and trustee will need to determine whether they wish to challenge a discharge for the filer, which would entail an adversary proceeding. Otherwise, the selected debts will be discharged within four months of filing. Not all debts are discharged, of course, and the method for repaying them will depend on the chapter that was chosen.

You Will Need Help

The truth is, while there are certain aspects of filing bankruptcy that can always be expected, every single case is different. For that reason, it is crucial to confer with a seasoned West Palm Beach bankruptcy attorney about your unique situation. If you have questions about filing for bankruptcy, call the team at Kelley & Fulton today.