Before You File
Filing for bankruptcy is not an instantaneous decision, and the preceding months are more significant than you may realize. There is much to consider regarding your current financial situation, past transactions, and even bankruptcy filing history.
If you have previously filed for bankruptcy, you may not be eligible. In order to be eligible to file for Chapter 7 bankruptcy again, you must wait at least 8 years after a prior Chapter 7 discharge or 6 years after a prior Chapter 13 discharge. You must wait 4 years after a prior Chapter 7 and 2 years after a prior Chapter 13 before filing for Chapter 13.
Your financial history preceding your filing is also crucial. Significant changes to your income or the incurrence of new debt prior to submitting a claim may affect your eligibility. The court may suspect you of fraud if you have recently sold or transferred assets prior to petitioning. Therefore, the general norm prior to filing for bankruptcy is to refrain from incurring new debt, making significant changes to your income, or tampering with your assets for at least six months. Moreover, in bankruptcy, you must always be transparent and truthful about the details of your finances.
Throughout Your Case
Your creditors will be informed of your filing once you have submitted your petition. Although your creditors will be prohibited from contacting you regarding your debts, you may be required to confront them at your 341 Meeting of Creditors. This meeting is conducted so that creditors can present their claims to the trustee and ask questions. You must attend this meeting and provide truthful answers to any inquiries, despite the fact that many creditors will not be present. You will also be required to complete a credit counseling agency's debtor education program. In order to obtain a debt discharge, you must satisfy both of these conditions.
While the court processes your case, you are also responsible for maintaining track of its status. If there are any changes to your obligations, income, or assets, you must notify the court immediately. In a Chapter 7 case, these modifications may affect your liquidation proceedings, whereas in a Chapter 13 case, they may affect your payment schedule. Keep in mind that the bankruptcy procedure was created with you in mind. This is a tool for assistance, not punishment. To reap the benefits of the process, one must be an active and trustworthy participant in the process.
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