Once you’ve decided to declare bankruptcy, you will need to complete several bankruptcy forms and submit various personal and financial information to the court. You will also need to attend bankruptcy court hearings, plus other procedures. If you have not yet fully decided to pursue your bankruptcy case, a skilled bankruptcy lawyer can assist you in weighing the pros and cons of applying for bankruptcy in Austin.
Here is a quick overview of the steps you’ll go through in a bankruptcy application:
Step 1: Credit Counseling
Complete a credit counseling course within 180 days of declaring bankruptcy. Check that the course provider is approved by the U.S. Trustee’s office and prepare around $25 -$35 for the course. If you are unable to afford credit counseling, you may be eligible for discounts or even a free course.
Step 2: Bankruptcy Petition
File your petition for bankruptcy and pay the fees in the federal bankruptcy court within your area of jurisdiction. You need to declare your income, debts, properties, and assets owned. After filing your bankruptcy application, the bankruptcy court will issue an automatic stay. This order shall effectively halt all creditor collection activities. If you’re dealing with foreclosures or repossessions, the automatic stay provides you protection from any creditor action. It will be illegal for them to give you a call, or a demand for payments. In turn, lenders may try to reach you through your bankruptcy attorney. To avoid any potential complications, make sure that you’re working with a trusted bankruptcy lawyer.
Step 3: Creditors Meeting
Attend your scheduled 341 meeting with creditors. Although it is named after your creditors, it is in fact rare for them to attend this meeting. Usual attendees are comprised of you, the bankruptcy trustee, your bankruptcy lawyer, and your lenders. During the meeting, expect to be asked clarification questions as the trustee will need to confirm the accuracy of the information you submitted.
Step 4: Debt Counseling
Attend a second credit counseling session after the creditor’s meeting. This will help you understand your current financial situation and manage your debts moving forward.
Step 5: Confirmation of Bankruptcy Eligibility
Wait for the court to determine if you are qualified for bankruptcy. The court reviews your bankruptcy information, bankruptcy forms, and other relevant data presented during the meeting of creditors. If you are filing a Chapter 7 bankruptcy, the court will check if you passed the Means Test. On the other hand, if you filed bankruptcy under Chapter 13, then the bankruptcy court will calculate how much your secured loans and unsecured debts are worth to determine if you qualify.
Step 6: Court Decision/Debt Discharge
The process of discharging your debts will vary depending on which of the different types of bankruptcy you selected. If you choose Chapter 7 bankruptcy, the court will require you to place your assets in a bankruptcy estate to be sold or auctioned off. All proceeds will then be used to pay off creditors. But if you choose Chapter 13, bankruptcy, you will draft a proposed payment plan.
