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Where should you file a bankruptcy petition?

Colorado residents struggling with debt understand how difficult it can be to live day by day with crippling debt. While these individuals often want immediate help, it is important to know that true debt relief may often only be accomplished after a person undergoes a series of steps, for instance through Chapter 7 bankruptcy.

Just as a person's debt is frequently accumulated over a substantial period of time, the discharge of debt under Chapter 7 does not happen overnight. Rather, the debtor must follow certain requirements when filing for Chapter 7.

Perhaps the first official requirement is filing the Chapter 7 petition in the right place. To start a Chapter 7 case, the debtor must file a petition with the bankruptcy court in the area where the debtor lives. For business debtors, the petition should be filed where the business is organized or has its principal place of business.

While this sounds straightforward, it is an important requirement that can have consequences if it is not followed. For example, a mayor of an out-of-state town is currently facing a challenge to his bankruptcy petition from a bankruptcy court administrator. The administrator claims the bankruptcy petition should be dismissed or transferred because it was filed in the wrong district in the state.

The administrator claims that, by filing in the wrong district, the mayor has engaged in forum shopping, which is the practice of improperly choosing where or how to file in order to get a more favorable judge on the case. It remains to be seen how the court will rule on the issue, but it is an important reminder for individuals to work with a qualified bankruptcy attorney in order to ensure that all requirements are met in filing for bankruptcy. By meeting the appropriate requirements, individuals can obtain debt relief and a fresh financial start.

Source: News Record, "Perkins' bankruptcy may be moved to Greensboro," Amanda Lehmert, April 18, 2013

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