A Breakdown of the Bankruptcy Process

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Bankruptcy can help solve a number of financial problems by stopping wage garnishments, foreclosures, repossessions, lawsuits, and harassment by creditors. While Chapter 7 bankruptcy differs from Chapter 13 bankruptcy, the filing process for both types is very similar.

Filing and Credit Counseling

When filing for bankruptcy, a debtor begins by filing a petition, schedule, and statement of financial affairs with the bankruptcy court. The schedule includes a listing of all creditors, property, monthly income, and monthly expenses. The filing fee for a Chapter 7 bankruptcy is $335, while the filing fee for Chapter 13 bankruptcy is $310. However, debtors must complete a court-approved credit counseling course via telephone, internet, or in person before filing for either type. These counseling services typically charge a fee between $25 and $75 based on which counseling course is taken.

Automatic Stays and Financial Management Courses

Once the filing has been completed, an automatic stay is placed on all of the debtor’s property and assets, including bank accounts, savings accounts, homes, and other personal property. An automatic stay prevents creditors from contacting the debtor in any way, putting an end to creditor harassment. After the automatic stay is in place, debtors must attend a 341 meeting with a trustee who is appointed by the bankruptcy court before participating in a court-approved financial management course. This course is similar to the credit counseling course.

Discharge of Debts

After the financial management course is complete, debtors will receive discharges wiping out most of their debts. However, some debts will still remain after the bankruptcy process is complete. This includes IRS or state taxes, student loans, secured debts, alimony, and spousal maintenance or support payments.

It is important to meet with a bankruptcy attorney prior to filing for bankruptcy. An attorney will help you understand what you can expect during the process and may also accompany to your 341 meeting to protect your legal rights when working with a bankruptcy court trustee. For more information on your Milwaukee bankruptcy options, contact Burr Law Office at (262) 827-0375. Or if you’re bored and want to learn about the history of bankruptcy, click here.