As a private debtor, meaning your debt is not derived from business conduct but rather from your personal financial situation, you have two basic options to you, chapter 7 and chapter 13. There are numerous benefits to chapter 7 including the amount of time it takes to file. Chapter 7 typically only takes a few months whereas chapter 13 involves a repayment plan that can be spread out for as much as 5 years.
When filing chapter 7 your unsecured debt such as credit cards will be liquidated (wiped out) and your remaining debt will be paid out of any income that exceeds your cost of living determined by the courts, this income will be divided by your creditors. If there is any outstanding debt after the end of the payment period then it will be discharged by filing chapter 13.
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The first step to filing chapter 7 is to see if you qualify for self filing. There is a test that will indicate if your situation is conducive to filing without an attorney. This test is known as a means test. This test will basically determine the level of your situation and see if you need to settle the situation before the courts with the assistance of an attorney.
There is an extremely large amount of paperwork required for filing chapter 7. To simplify this process you may want to consider contacting an online bankruptcy service, this service is not an attorney but rather specialist that will walk you through the process. These forms are rather complicated so it is important that you get assistance. It is usually best to find a reputable bankruptcy attorney who can assist you with any bankruptcy proceedings.
The service will work with you to gather together all of your financial information. It is important to not leave anything out, be sure to include all of your creditors. There is some credit counseling that is mandatory. You will need to listen to the lecture then answer some questions pertaining to the information just provided.
Once your paperwork has been completed then you are ready to file with the local courts and pay a filing fee then wait for about 30 days. At which point you will be contacted by the courts for a creditor meeting in which you are asked some quick questions and you will then be required to attend a 90 minute debtor education class designed to help you avoid similar situations in the future. Within 5 months you should receive a letter informing you that your debt has been wiped out.
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