What’s The Cost To File Bankruptcy?
Filing for bankruptcy is commonly frowned upon. But it is an effective way to help you discard or reorganize your debt. You can choose to file for bankruptcy under Chapter 7 or Chapter 13, depending on the nature of your needs.
Although filing for bankruptcy can be crucial in debt management, filing for bankruptcy is highly arduous and filled with legal bureaucracy. In most cases, people filing for bankruptcy are often advised to consult with a lawyer. While this is highly recommended, it can drastically affect the cost of filing for bankruptcy. DoNotPay can ease the process of filing for bankruptcy and provide you with vital information that can make your application successful. Here's a look at how DoNotPay can help.
What is Bankruptcy and What Happens When Declaring Bankruptcy?
Bankruptcy is a legal lifeline for people that are drowning in debt. It is a petition to the court by a consumer or a business to release them from liability for their debts. When you file for bankruptcy, the request is granted in most cases.
When you file for bankruptcy, you get immediate debt relief. The law prohibits creditors from contacting you as soon as your case is filed through an automatic stay. Filing for bankruptcy also stops any wage garnishment processes immediately.
Will I Lose My Property When Filing for Bankruptcy?
As you would expect, filing for bankruptcy isn't a surefire process, and sometimes it can also be unpredictable. That is why you need to know as much as possible before starting the process.
Luckily, when you file for bankruptcy, you might not lose all your possessions. There are some assets you might get to keep called bankruptcy exemptions. A Licensed Insolvency Trustee cannot seize these assets when you file.
Some of the bankruptcy exemptions you can expect include;
- your house
- your car
- health aids
- tools of trade
- food and heating fuel
How much you get to keep after filing for bankruptcy also depends on the type of bankruptcy you file for;
Chapter 7 Bankruptcy
Under chapter 7 bankruptcy, a trustee is appointed by the bankruptcy court to liquid many of your assets. The proceeds from these assets are used to pay the creditors some portion of what you owe them.
Under this section, some assets are free from liquidation like part of the equity in your home, car, clothing, and work tools, among others. The trustee can sell properties other than your primary home, a second car, recreational vehicles, and other luxury items.
Chapter 13 Bankruptcy
In chapter 13 bankruptcy, you commit to repaying the agreed-upon portion of your debts within three to five years. As long as you keep up with the terms of the agreement, you can keep your non-exempt assets. At the end of the repayment period, your remaining debts are discharged.
Typically, Chapter 13 bankruptcy allows you to keep more of your property. But only if you adhere to the agreed terms.
What Happens to My Credit If I Declare Bankruptcy?
Although beneficial, there are also downsides to filing for bankruptcy. Among them is how it impacts your credit score.
The bills you include in your bankruptcy filing and those discharged will appear in your credit report. The remarks on the bills are removed in a timely manner as you work to clear them. But your credit will show a public record of bankruptcy for up to 10 years. Also, discharged accounts will get a negative mark.
What Bankruptcy Cannot Do
There are many things you can accomplish by filing for bankruptcy. But there are several things bankruptcy cannot do, including;
- Eliminating tax debt
- Eliminating spousal or child support
- Eliminating student loan debts
- Eliminating all debt
What is Chapter 7/ Chapter 11/Chapter 13 Bankruptcy
There are various sections of the constitution that you can use to file for bankruptcy, depending on the specifics of the situation.
|Type Of Bankruptcy:||What Happens:|
|Chapter 7||Chapter 7 bankruptcy is known as the liquidation or straight bankruptcy. It is the most common. A court-appointed trustee oversees the liquidation of your assets to pay of your credit, and the unsecured debt is erased.|
|Chapter 11||Chapter 11 bankruptcy is for businesses and corporations. Under this type of bankruptcy, businesses come up with a plan of how they can continue operating while paying off their debt. The court and the creditors must approve this plan.|
|Chapter 13||Chapter 13 bankruptcy basically reorganizes your debt. The court approves a monthly payment plan to allow you to pay back a portion of your unsecured debt and all of your secured debts over a period of three to five years.|
How Long Does It Take to File for Bankruptcy?
How long it takes to file for bankruptcy depends on the type of bankruptcy you're filing for. Chapter 7 bankruptcy takes a shorter time to file. The period from filing to discharge is four months to one year. Chapter 13 filing is longer and takes about three to five years from filing to discharge.
Should I File for Bankruptcy?
Bankruptcy isn't the only alternative to your debts. But you should consider filing for bankruptcy if;
- You are getting a divorce
- Your home is in danger of foreclosure
- Creditors are suing you for payment of debts
- You can only manage to pay for things using a credit card
- You're using one credit to pay off another
How to File for Bankruptcy by Yourself
It's not recommended to file for bankruptcy on your own. But if you would rather by-pass the legal fees, you can complete the process by following these steps;
- Collect all the necessary documents
- Consider taking some credit counseling
- Complete the bankruptcy forms
- Have the filing fee
- Print the bankruptcy forms
- Take the documents to court for filing
- Mail copies of the documents to the trustee
- Take a bankruptcy course 2
- Attend the 341 meeting
What To Do If You Can't File For Bankruptcy Yourself
Although the laid-out process for applying for bankruptcy seems simple, it is tedious, lengthy, and often frustrating. It is best to have a bankruptcy lawyer assist you. Alternatively, you can use DoNotPay, which will make the filling easier and faster.
File for Bankruptcy with the Help of DoNotPay
It's important to note that DoNotPay can only help with Chapter 7 and Chapter 13 bankruptcy filing. Using DoNotPay, you can save yourself time, money, and emotional distress and file your bankruptcy in five easy steps.
- Search for File for Bankruptcy on DoNotPay.
- Put together a list of your debts, expenses, and assets. If you need help accessing information like your credit report, DoNotPay can help you get your report.
- Let DoNotPay walk you through your bankruptcy options and help you determine whether a Chapter 7, Chapter 12, or Chapter 13 bankruptcy is right for you.
- DoNotPay will then help find the best credit counseling course near you, which you need to complete before filing your bankruptcy forms.
- Lastly, DoNotPay will gather all of the forms you need (including available fee waivers) and help you locate your nearest bankruptcy court. All you have to do is complete the required forms, prepare your filing fee, and file the application with your local court.
After this process, you will just wait for the court to give you;
- A bankruptcy case number
- The name of your bankruptcy trustee
- A date, time, and location for meeting the trustee
What Else Can DoNotPay Do?
Besides helping you file for bankruptcy, DoNotPay can also help you with other common problems like;
- Understanding a 609 letter
- Getting a debt verification letter
- Getting compensation for breach of contract
- Requesting for an inflation pay request