This year has been particularly bad for a lot of people as the bankruptcy filings have gone up. If figures have any meaning than over one million Americans have filed for bankruptcy in this year. The reform of banking act passed under George Bush in 2005 seems to have had no effect and bankruptcies are on the rise. The bankruptcy reform of 2005 was passed with a view to make bankruptcy the last resort, but the emerging scenario with all around recession has vitiated the atmosphere as more and more citizens are filing for bankruptcy.
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Bankruptcy is not a happy thing. But circumstances can force a person to file for bankruptcy. In case your financial condition is precarious and you are unable to service your debts then bankruptcy can be an option. But always treat it as the last option. The bankruptcy law is fairly complex and incorporates elements of contract, mortgage, lease and other acts as well.
a) As a first step an individual must be aware of what he is getting into. His legal rights and obligations must be in his know. Hence consulting an attorney can be a help. But in case you are fully aware of the provisions of bankruptcy law then this consultation with an attorney can be dispensed with.
b) The next step is to get a set of forms from the bankruptcy court and complete them in all aspects. This documentation is fairly voluminous and may run into a lot many pages. You will have to complete these documents correctly and certify all information as true. These documents are to be attached to your plea for bankruptcy in the relevant court. I will advise consulting an attorney to help complete these forms as they will form the pivot of your plea for bankruptcy.
c) The next step involves checking and verifying the correctness of the information provided in the forms/documents. After the forms are verified the complainant is to approach the United States District Court, bankruptcy division. It is important to note that the plea for bankruptcy can only be heard in a court that is designated as the bankruptcy court in the place where the litigant is ordinarily resident. The residence clause is important and cannot be dispensed with. For example a resident of New York cannot file a bankruptcy plea in any other place.
D) After the verification the forms along with the plea for bankruptcy is filed in the court. A filing fee of about $200 is charged and is to be deposited in the state treasury. This fee is variable and depends from state to state. The filing fee is to be deposited in the state treasury. The court has the power to waive the bankruptcy fee in case of certain circumstances. For this a waiver is to be filed with the approval of the court.
e) The court has now to decide on your bankruptcy plea. In case it is accepted the creditors are informed by the court. A meeting with the creditors is arranged and they can question you. Any objections of the creditors have to be filed by them also. The meeting with the creditors is the signal for the court to accept your plea of bankruptcy and get on with the legal process.
f) The court will appoint a trustee to oversee the bankruptcy process. This trustee works along with the debtor and catalogues all his assets and liabilities well as their disposal and sale. The trustee is appointed by the court to protect the rights of the creditors. He must be impartial in all his dealings.
Certain significant exemptions are further listed by the Bankruptcy law in the US. These cover your property, home, car, personal clothing, household furniture; etc.which can be kept by you though you may have filed for bankruptcy. Federal Bankruptcy Law has been amended by many states. Therefore make it a point to be aware of the amendments incorporated in the state you reside. Hence I will recommend an attorney at your side for all the period the bankruptcy hearings are on. The steps to file for bankruptcy are not difficult. The two major chapters are chapter 7 and 13.You can file for bankruptcy under any of these chapters depending upon your circumstances.
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