A person, who is facing mounting debts and harassing calls from creditors for increasing number of unpaid bills, opts to declare himself bankrupt. Bankruptcy is a legal process by he will be able to resolve financial problems within a reasonable time, through the division of assets amongst his creditors. After that he will have an opportunity to start afresh. A person can opt for filing bankruptcy as an individual or on behalf of his business.
The first thing to file for bankruptcy is consulting with a bankruptcy attorney. He has to submit all his bank statements, loan papers, credit bills, debt notices, and tax returns to the attorney. The latter will analyze his financial condition and will advise him to choose the most suitable type of bankruptcy.
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For a resident of Elk Grove, California, with a steady income, Chapter 13 would be the best option. A person can file for this type if his income is more than the state's median income and he wants to retain the property. The person will be allowed to opt for a debt management program, so that he can repay his debts within 3 to 5 years. A trustee, appointed by the court will collect the payments and distribute that amongst the creditors. However, he will have to pay a charge to the trustee. It should be remembered that once a person files for bankruptcy, it will create a negative effect on his credit score. A Chapter 13 bankruptcy will stay in the credit report for 7 years.
As per the new bankruptcy law, which came into effect from 17th October, 2005, it is mandatory to take a credit counseling session, prior to filing for bankruptcy. The credit counselor has to be approved by the US Trustee. It is better to consult and take help of a reliable bankruptcy lawyer, to make the process simplified. For filing Chapter 13 bankruptcy in Elk Grove, one needs to meet the following requirements-
* He should have undergone credit counseling from an approved credit counselor, 180 days prior to filing.
* His secured debts must not be over $1,010,650 and unsecured debts must be less than $336,900.
* He should not fail to appear before the court during the last 180 days.
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