Filing for bankruptcy can be a daunting prospect, but it can also be a great way to get out of debt and start fresh. In the United States, bankruptcy is a legal process that reduces, restructures, or eliminates your debts. It is highly recommended to seek the advice of a qualified lawyer because bankruptcy has long-term financial and legal results. This article will provide an overview of the process of filing for bankruptcy in the United States, including the different types of bankruptcy, how to file without a lawyer, and what to expect after filing.
When it comes to filing for bankruptcy in the United States, there are two main types: Chapter 7 and Chapter 13. Chapter 7 is the most common type of bankruptcy and is often referred to as “liquidation” or “straight bankruptcy”. It involves selling off assets to pay off creditors and discharging any remaining debt. Chapter 13 is known as “reorganization” or “wage earner” bankruptcy and involves creating a repayment plan to pay off creditors over time. People can file for bankruptcy without a lawyer, which is called a pro se filing.
However, it is highly recommended to seek the advice of a qualified lawyer because bankruptcy has long-term financial and legal results. Before filing for bankruptcy, individuals must complete a pre-bankruptcy credit counseling course either online or by phone up to 180 days before filing. All bankruptcy cases in the United States are processed through federal courts. Any decision in federal bankruptcy cases is made by a bankruptcy judge, even if the debtor is eligible to file an application and if their debts should be forgiven.
The debtor must also file returns for the last four tax periods. When filing for bankruptcy, individuals must use forms that are numbered in the 100 series. The American Bankruptcy Institute states that 95.3% of people who file for Chapter 7 bankruptcy are successful. Once you have filed the application, the bankruptcy administrator assigned to your case will organize a creditors' meeting, also known as meeting 341, after the section of the bankruptcy code where it is mandatory. Creditors can file objections if they wish to do so. If you owe back federal taxes that you can't afford, bankruptcy may be an option. Other options include an IRS payment plan or a compromise offer.
If you included the IRS as a creditor in your bankruptcy, the IRS will receive an electronic notification about your case from the U. S. bankruptcy courts within one or two days from the date of the request. In theory, the possibility of declaring bankruptcy benefits the overall economy by allowing individuals and businesses a second chance to access credit and by providing creditors with a portion of the debt repayment. Filing for bankruptcy can help release you from your legal obligation to pay your debts and save your home, your business, or your ability to function financially, depending on the type of bankruptcy petition you file.
Filing for bankruptcy can be a difficult decision but it can also be an opportunity to start fresh and get out of debt. It is important to understand all aspects of filing for bankruptcy, including different types of bankruptcy, how to file without a lawyer, and what happens after filing. Seeking advice from a qualified lawyer is highly recommended as bankruptcy has long-term financial and legal results.
