It is frightening to see your personal debt mount over time. What began as a simple monthly credit card bill, an unexpected medical expense or a standard mortgage payment might have snowballed from one cost to another. The next thing you know, you feel like you're suffocating under a seemingly indomitable amount of debt. There is a way to free yourself, though.
If you're feeling the pressure of a significant amount of debt, bankruptcy may be the answer. Bankruptcy is not the frightening thing that many people think it is. It is not giving up; it is not admitting defeat; it is not taking advantage of the system. It is a way to get a fresh start for yourself.
A lot of people file for bankruptcy. You may not initially think it, but a full 20 percent of people who file are over 55 years old and have a college degree. The majority of them are also married with families, and are often normal, middle-income folks. Sometimes you're simply dealt a bad situation, and bad situations can always go from bad to worse.
The Chapter 7 bankruptcy processes
When someone is faced with a lot of unsecured debt - debts like credit cards, medical bills, personal loans and anything not backed up by collateral - Chapter 7 bankruptcy is often the best course of action. The process, generally, entails a few steps:
- Meet with a credit counselor- Per an overhaul of bankruptcy law in 2005, you must speak with a credit counselor before filing for Chapter 7. An experienced bankruptcy attorney will help you with this and future steps in the process.
- Petition for bankruptcy - The first step in formally filing bankruptcy is to fill out a bankruptcy petition and other paperwork entailing information about your income, expenses and what exemptions you may be eligible for.
- Automatic stay - This is where you will finally feel some breathing room. Once your stay is in place, creditors will no long be allowed to contact you.
- Appointed trustee - The court will appoint a trustee to review your paperwork and seize your nonexempt assets to be paid to creditors.
- Creditor meeting - In this step you will meet with your creditors to be questioned about your finances and the legitimacy of the forms you've filled out. This meeting can often feel intimidating but is often quite short and painless.
- Assets are liquidated - Your trustee will review your nonexempt assets and decide what is worth seizing and selling to then be distributed to your creditors. A skilled bankruptcy attorney is also important here, as they may be able to negotiate with the trustee to keep nonexempt property.
- Debtor education course - One of the last things you will do during this process is attend a debtor education course. This is a general course to help you stay on track with finances and is generally under $50 to attend.
- Discharge and closing - After steps 1-7 are completed, all that remains is for you to receive your bankruptcy discharge, which lifts your automatic stay. Soon after your discharge your case will formally close and you will be free from most of your creditors. Time to get going on your fresh start!
Everybody's situation is different, and no two bankruptcy cases are the same. The steps above are just a general example for how a course can go. If you're looking for a fresh start for you and your loved ones, consider using this process to get started on your new, best future.