Contrary to popular belief, you cannot simply appear in the nearest town or city court and expect to fill out court bankruptcy forms.
Instead, you must appear in a federal United States bankruptcy court which presides over these matters.
Since the paperwork can be complicated, the laws are always changing, deadlines are crucial to the success of your case and dealing with creditors can be frustrating, most people seek out legal professionals who specialize in bankruptcy to lead the way.
While it may cost $400 to $1,500 in the end, many debtors agree it's a small price to pay for such comprehensive assistance.
As of 2005, new rules apply to appearing in bankruptcy court in the US.
First of all, before you fill out your free bankruptcy form, you must meet with credit counselors to discuss any alternatives and get a handle on any problems that may have lead to your abject financial situation.
The meeting must occur within 6 months prior to your filing and the counselors must be from a trustee-approved agency (which can be found at Uscourts.
) You must also submit to a "means test," which will look at your income and expenses compared to the state averages and will further determine your eligibility.
Even though it is called "The United States bankruptcy court," little activity occurs directly in court.
When you fill out bankruptcy application forms, most of your case will be handled administratively through clerks, trustees, administrators and judicial officers.
The U.
S.
bankruptcy judge will step in to determine eligibility, whether the debtor should receive a full discharge of debts and to settle disputes with creditors if there are any.
Unless there are objections with your case, you will probably never see the bankruptcy judge.
You will likely attend a meeting with a credit counselor, one with your legal professional (if you've hired one) and a "341 meeting" with your creditors and trustee.
The end goal of a Chapter 7 filing in United States bankruptcy court is the discharge of all debts.
This means that you will no longer be required to pay any money on your debts, which may include medical bills and credit card statements.
However, you cannot discharge debts like IRS tax requirements, alimony/child support, court obligations from being sued and long-term car or house payments.
In Chapter 13 bankruptcy, you will be required to pay off most of your debts on a reasonable monthly payment plan, but you can include things like debt arising from divorce or property settlements, debts from willful injury to property and debts from tax obligations.