What Is the Process to Filing For Bankruptcy?

Filing by a debtor is called voluntary bankruptcy while involuntary bankruptcy is declared by the court upon petition by a creditor. Majority of Americans try to pay off their high interest debts, even when filing bankruptcy would be the wiser choice. They will only file when they start receiving annoying calls and notices, from creditors, reaching an unbearable threshold.

Once the bankruptcy case is filed, the collection efforts against the debtor immediately ceases because the debtor protection takes effect automatically. The creditors cannot sue, write to or call the debtor demanding payment and any form of harassment on the debtor ceases. In addition, secured creditors cannot foreclose on their collateral, debt collectors cannot repossess the property through either self-help mechanisms or judicial proceedings, and wages cannot be garnished once the bankruptcy case is filed. During this time, the debtors get a chance to think about the financial problems and contemplate options for resolving the Bankruptcy filing process.

Most people can handle the process on their own but majority prefers to hire a lawyer. Filing bankruptcy is simple because it is just a matter of filling the right information in the right blanks and submitting the papers to the bankruptcy court. You can file more often under Chapter 13 reorganization but you can not have more than one case open at the same time; you can only file for Chapter 7 once every eight years.

The Bankruptcy Code required a debtor's filing bankruptcy to include:

(1) A list of creditors,

(2) A schedule of assets and liabilities,

(3) A financial schedule of current income and expenditures, and

(4) A statement of the debtor's affairs.

Once your voluntary petition is filed at the bankruptcy court, you will be assigned a trustee who will ensure that all the information needed is collected and it is accurate. The next step would be to inform your creditors that you will be filing for bankruptcy so that they will have to stop all actions against you. By law, your creditors are not allowed to contact you and the later procedures will be meeting your creditors and if possible your creditors' lawyers.