Chapter 7 bankruptcy was designed to help the individual consumer who is in significant debt to get a fresh start at life. The first step is to discuss this option over with a lawyer. The next step is to file, as soon as you can. The thought of bankruptcy can be overwhelming for some people, who may sit on the paperwork for a long time. You gain many benefits from just filing for bankruptcy, so take advantage of the opportunity.
The following gives you an idea of the process, timing and the benefits you'll get from filing your bankruptcy claim quickly.
Preparing the Filing
Your lawyer's office will put together the paperwork to give to the bankruptcy court. They will ask you for information, the most important of which is the list of creditors. This list includes all of the people to whom you owe money. Make sure this list is as complete as you can make it. Don't leave anyone out because it's difficult to add to the list once the paperwork has been filed.
When the paperwork is ready, your lawyer will file it with a U.S. bankruptcy court. The process is now turned over to the court, but you can begin to reap the benefits of having filed.
Filing Versus Discharge
The process starts when the paperwork if filed with the court. At the end of the process, the bankruptcy judge will either sign an order discharging the bankruptcy filing, or not. The discharge order is the action that clears your debt. Regardless of the outcome of the process, you'll get the following benefits from having filed.
Creditor Action is Stopped
Once you've filed for chapter 7 bankruptcy and all creditors have been notified by your lawyer's office, any attempts to collect a debt from you must stop. Creditors and bill collectors must stop calling or sending you notices. If you have been accumulating late fees on accounts, the creditors must stop adding those fees.
Income and Assets are Protected
Any actions to garnish your wages must stop once you've filed. Any cash assets or bank accounts you own cannot be seized by a creditor. If you are working, you can relax knowing that your income is safe during the bankruptcy process.
If you have received notices from your mortgage company that your home is being foreclosed, that must be paused while the court has your paperwork. Since chapter 7 bankruptcy is liquidation, the court trustee may determine that selling your house, rather than foreclosure, will benefit the creditors more.
Protection from Lawsuits
During the time between filing and discharge, creditors can't take legal action against you. If they have already started a lawsuit against you, your lawyer's office will work with the creditor to dismiss the action.
Delaying your bankruptcy filing only delays the benefits you gain from that action. As soon as you and your lawyer have determined that a chapter 7 filing is the best action for you, complete the filing as soon as you can and take some of the stress off while you're rebuilding your life.