Bankruptcy is defined as a legally declared inability or incapability of an individual or organization to pay their creditors. Individuals can file for personal bankruptcy under chapter 7 of the bankruptcy act after they take a credit counselling course, completed an approved financial management course before discharge and after passing the means test?
Debtors filing Chapter 7 or Chapter 13 bankruptcy must present a copy of a tax return or transcription of a tax return of the period for which the return was most recently due to the trustee, at least seven days before the 341 meeting
The documentation required for filing for personal bankruptcy includes a list of creditors, detailed description of current income, current personal expenses, and an identification photograph. The last 60 days worth of pay check stubs must also be filed along with the bankruptcy paperwork in the bankruptcy court.
A statement of monthly net income and any anticipated increase in income after the filing should also be mentioned. Tax returns that were not filed during the bankruptcy case will also be needed. Copy of security agreements with secured creditors and copies of divorce decrees, property settlement agreements, separation agreements and child support orders also have to be included along with an application for personal bankruptcy. It is always advisable to contact an attorney before filing for personal bankruptcy.
The Department of Justice’s United States Trustee Program oversees administration of bankruptcy law. There are five chapters of United States bankruptcy law, which apply to different situations:
Chapter 7: Used by consumers and businesses, it eliminates many debts such as credit card and medical bills not secured by collateral, in exchange for the liquidation of assets not protected by federal or state exemption laws.
Chapter 11: A debt reorganization and pay-back plan mostly used by businesses but also some consumers with too much debt to qualify for Chapter 13.
Chapter 12: Resembling chapter 13, designed for family farmers and fishermen.
Chapter 13: A debt reorganization plan chiefly used by individuals who want to keep possession of assets such as homes and cars by becoming current on delinquent loans and repaying unsecured debts according to their means.
Chapter 15: Added to federal law by Congress in 2005 to codify law governing business bankruptcy cases involving parties in more than one country.
filing before personal bankruptcy
Choosing to file for bankruptcy can be a tough decision. There are many things to consider when deciding if filing for bankruptcy is right for you. What type of bankruptcy should I file? How bad will it be for me long-term? Have I tried everything else? What can I expect? The best thing you can do is arm yourself with knowledge.
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