As consumers become aware of the benefits of bankruptcy, more people are choosing to pursue it. Many find it to be a helpful way to eliminate debt and get back on a healthy financial footing.
There are several steps people must take in order to complete the process in full, and missing any of them may be detrimental. Though many of the steps happen organically, there are a few in particular that require intentional participation on behalf of the filer.
Present necessary paperwork
Debtors must present several documents during the bankruptcy process. A few of the main documents they must provide in their filing include the following:
- Itemized income sources
- Monthly living expenses
- Any debts
- Major purchases in the last two years
- Deeds to assets
The bankruptcy court utilizes this information to confirm eligibility for bankruptcy, as well as to determine how to treat the assets. Not presenting any required documents or not documenting any assets can have negative effects on the process.
Education and counseling
Before parties may begin the bankruptcy process, they must undergo credit counseling. Once the bankruptcy filing is underway, the filer must also attend and complete a financial management instructional course. The requirements may vary in different states; therefore, the states have lists of eligible institutions for completion of the educational and counseling programs.
The meeting of the creditors, or 341 meeting, establishes the grounds for paying or forgiving the debts of the debtor. Therefore, this step is essential, and it is mandatory for the debtor to attend. The trustee of the bankruptcy account facilitates the meeting to ensure they meet the set goal of creating formal agreements for repayment or loan forgiveness.
By understanding and fulfilling these processes, debtors will do their part to make the bankruptcy a success. If you are considering filing, take some time to review the law and the full bankruptcy process to determine the best course of action.