The Bankruptcy Filing Process

The Bankruptcy Filing Process.

There are a lot of people in South Carolina that have questions about the bankruptcy filing process.  While it can vary depending on several factors, this post should provide some basic insights into what to expect in a typical case.  Bankruptcy can be a scary and intimidating situation but working with the right bankruptcy attorney can make the whole experience smoother and less stressful.

Choosing an Attorney.

The first and most important step is to find an attorney that you feel comfortable with and who can answer your questions fully.  Sometimes, clients will shop around for looking for the best deal or the biggest name.  The cheapest attorneys may not be the best fit for you.  Just remember the old saying: you get what you pay for!

The Initial Consultation.

When you meet with the attorney, make sure you bring with you a list of ALL your debt and the values of your assets.  This will help the attorney determine the best chapter for you.  After you meet with the attorney, there will be documentation needed to complete the process and you will have to complete your attorney’s questionnaire.  You will also need to complete a credit counseling session and provide that certificate to your attorney.  The credit counseling must be completed within 180 days of the filing of the bankruptcy.  If you wait too long, then you will have to do it again.  It is best to do it right before you meet with your attorney to sign your prepared paperwork.

Filing your Bankruptcy.

After you have completed the paperwork requirements and paid your attorneys fees, then you will have a signing appointment.  At this signing appointment, the attorney will explain in detail all the paperwork that will be filed with the court.  This is the best time to add creditors that you forgot or tell the attorney if the paperwork is incorrect. Once the paperwork has been signed, then the attorney will file the case with the Bankruptcy Court.  Everything is done electronically and Bankruptcy is public knowledge.  Your attorney will inform you of your case number and what will be expected of you for the remainder of the case.

After the Case is Filed.

Once your case is filed, then you will have a court hearing called the “Meeting of Creditors” or the 341 hearing.  This is a very simple hearing in which you answer questions by the trustee (and sometimes creditors) about the schedules that you filed with the court. This is a relatively quick hearing.

If you filed a chapter 13, then your trustee payment is due 30 days from the date of filing.  The 30 days from the date of filing may be before the 341 hearing.  The trustee will usually request the plan payment be deducted directly from your pay check.  After the 341 hearing, you will have a confirmation hearing that confirms your plan for you and your creditors. You usually do not need to attend this hearing unless you are not current on your trustee payment or more documentation or testimony is needed. Then, once the plan is confirmed, you just need to keep making the trustee and mortgage (if applicable) payments. A chapter 13 plan is typically 60 months (5 years). Towards the end of the case, you will receive a request for discharge that will need to be filled out and returned to your attorney.  This document will have to be filed in order to receive a discharge of your debt. You will need to complete a second credit counseling called a financial management course.  This course will take about two hours to complete and is supposed to educate you about making smarter choices regarding your finances.  You will not receive a discharge if you do not file the request for discharge and financial management course.  So even if you have paid the trustee payment over FIVE years, if these documents aren’t filed, then you don’t discharge your debt.  That is why it is very important to keep your attorney’s office updated with current addresses and phone numbers.  If you move or get a new phone number, make sure you inform your attorney right away.

If you filed a chapter 7, then after the 341 hearing, you need to complete a second credit counseling called a debtor education or financial management course.  This course will take about two hours to complete.  It may be done prior to the 341 hearing but it must be done in order to receive a discharge. Typically, a no asset chapter 7 will take about four to six months to complete.  An asset chapter 7 will take longer to complete based how long it takes to sell the assets.  Usually, an asset chapter 7 can take a year or longer.

The moral of the story is to pick the right attorney!  If you would like to learn more about bankruptcy filing process in detail,  please contact my office to schedule a free initial consultation.  I am located right in downtown Columbia and offer after hours or Saturday appointments.

Debt Consolidation vs Bankruptcy

What are the differences between debt consolidation and bankruptcy?

Debt consolidation allows you to consolidate your credit card debt into one payment.  Typically a company will look at your debt, income and expenses, and create a payment plan for you. Debt consolidation will NOT include your finance companies, cash advances, medical bills, or various unsecured debt.  As you make payments to the company, they will hold the money and eventually disburse to the creditors. Creditors do not have to agree to the amount sent from the debt consolidation company.  Litigation does NOT stop. Creditors can still continue to sue you and possibly get a judgment against you.

 

Bankruptcy is a benefit provided to you by Federal Law. Chapter 13 bankruptcy allows you to consolidate ALL of your debt. You must list everyone you owe in a bankruptcy. You include taxes, medical bills, collections, charged off accounts, credit cards, furniture payments(not leases), car payments, mortgage arrears, finance companies, cash advances and all your unsecured debt.  You can pay back your unsecured debt as low as 1 percent. Your ability to pay is a part of how much you pay back to your unsecured debt. ALL civil litigation stops once you file. Bankruptcy creates an automatic stay that stops litigation, foreclosures, repossessions, tax garnishments, and harassing creditor phone calls!