When you file for bankruptcy, all of your assets and income will become subject to your creditors' claims. There are, however, certain exemptions that can be protected, such as the interest in a car up to $2,150, household furnishings, clothing, musical instruments, the federal earned income tax credit, a portion of wages, nearly all government benefits, certain bank accounts, and possibly the equity in your home.
However, you must complete a credit counseling course before filing for bankruptcy. You may be required to pay a fee for the class. Upon conclusion of the course, a list of all exempt assets and property, including the names of creditors and the amounts owed, is compiled. In addition, your current income and expenses are included.
The United States Bankruptcy Court receives the information on court-approved forms, along with a filing fee of $299. If you cannot pay the fee, the court may authorize a fee waiver. You may also pay in three installments over an 84-day period following filing.
The following phase involves a meeting with creditors. All creditors will be notified of the date, time, and location of the Section 341 hearing. This hearing is generally scheduled to occur approximately thirty days after bankruptcy filing. Attendance is required, and all responses must be made under oath. The court may dismiss the case in your absence.
You must provide a copy of your most recent federal tax return or a transcript that you can obtain from the Internal Revenue Service no later than seven days prior to this hearing. If you fail to do so, your case may once again be dismissed.
The court appoints a trustee to represent the creditors. He will determine if you have correctly filled out all forms and enumerated all of your assets and creditors. It is also his responsibility to seize and sell any of your non-exempt assets and distribute the proceeds among your creditors. A debtor must complete a second counseling course within 45 days of meeting with creditors in order to be eligible for discharge. This course is about managing personal finances. In the event that everything is in order and nobody objects, you can anticipate a debt discharge approximately 90 days after the meeting of creditors.
Even though an individual or unincorporated sole proprietor is not required to have an attorney, completing all the documents and other formalities can be challenging. Therefore, employing an attorney can be advantageous. After the conclusion of all proceedings, the judge will sign the discharge papers.
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