What Does It Mean to File for Bankruptcy?

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What Does It Mean to File for Bankruptcy?

20 October 2016
 Categories: Law, Blog

It is all too easy to end up in debt. Once you are in debt, it can be really hard to get yourself out of it. If you get to the point that there is no way that you can pay all your current bills, let alone your back bills, and still have money to live on, your only solution may be to declare bankruptcy. But what does declaring bankruptcy actually mean?

Declaring Bankruptcy

Declaring bankruptcy isn't as easy as just saying that you are bankrupt. You have to file legal papers. After you file the papers, you will have to appear in court before a judge. The judge actually has the final say as to whether or not you can declare bankruptcy. The judge has some options. One option is that they just approve your bankruptcy as is. Another option is that they will look at your application, your assets, your debts, and which chapter of bankruptcy you are filing and then say that you are filing the wrong kind of bankruptcy. The court could also decide to not grant your bankruptcy at all. To protect yourself from this happening, you should make sure that you see a lawyer to help you file. They can help you fill out all the appropriate paperwork and make sure that you are filing under the correct chapter. 

Repayment and Restructure

Part of the bankruptcy process is figuring out how you are going to repay your debt and what the payment structure is going to look like. While bankruptcy is a way to relieve your debt, there are still some things that you will have to repay. There are also some assets that you may have to get rid of to help pay back those debts. You will have a trustee that will negotiate with your creditors to find out how much they will accept as a payment in full and what kind of payment schedule they will accept. You will also have to hand over any assets that need to be disposed of to the trustee so that the proceeds of that liquidation can go toward paying back your creditors. The trustee will work with you as long as it is necessary to fix the bankruptcy, and that can take years. 

If you end up in so much debt that you can't get out of it through any other way, one option that you have is to file for bankruptcy. If you think this is a course of action you should take, visit sites such as http://www.carvajallaw.com/ to find a bankruptcy attorney near you.