Bankruptcy rules have changed dramatically over the last couple of years. Information on how to file bankruptcy can be found on the Internet in a number of locations. Most important to the bankruptcy court is the honesty of everyone involved with the case. The person seeking these services must reveal all unsecured debt, all assets and their respective values. If the trustee finds that the debtor has not revealed all assets, it could put the debtor in serious trouble. Fines, or even jail time could result.
Anyone can file bankruptcy himself, or can hire an attorney to do the services. If done himself, he will need to be meticulous about filling out the forms and fully understand how to file bankruptcy. When someone else prepares the petition, the debtor is the only person that is able to sign the papers. If the court finds that the preparer did sign for the debtor, it could mean a $500 fine for the person filing. Under the bankruptcy rules, the Trustees in Chapter 7 or Chapter 13 cases are first appointed by the court as interim trustees, then if the creditors' committee does not come up with another candidate they prefer, the court-appointed trustee begins handling the case.
Each individual must first decide which kind will be filed. Bankruptcy rules are different for Chapter 7 and Chapter 13. It is important to remember to include every unsecured debt owed, and list all assets as well under Chapter 7. Each state has specific bankruptcy rules about exempt assets, but usually a home, furnishings, car, and business tools are exempt. Any other possessions, from artwork to xylophones, are items the trustee can sell at auction, and then use the funds to pay creditors. If seeking how to file bankruptcy under Chapter 13, the initial procedure is very much the same as with Chapter 7 except that no assets are sold. Instead, plan for paying off creditors over three or five years is put into place. Payments are made until the end of that period, and any debts remaining unpaid at that time are discharged.
Everyone from the debtor to the trustee and the creditors has a role to play that is specifically defined, so when researching how to file bankruptcy it is important to fully understand these rules. The bankruptcy rules state that creditors cannot harass the filer after filing. Creditors can have some influence on the case if they form a committee and appoint someone they know and trust to be trustee, but that's as much as can happen. After that the creditors must then wait for the court to decide how much they will get. The filer has an obligation to be honest with his presentation of what was owed so that no one is cheated, and the Trustee must carry out the provisions of the Chapter that is being filed.
Regardless of the relief, it is far better if inquiring about such actions never has to take place. Rules are in place to keep everyone honest so the best results are achieved. However, there are drawbacks. Some of those which should be remembered are these: (1) A bad credit rating that makes it harder to ever borrow again; (2) having to appear in court; (3) lose assets when creditors sell property, like a car or house; (4) garnishment-- up to 10% to pay creditors. "For God hath not given us the spirit of fear; but of power, and of love, and of a sound mind" (2 Timothy 1:7) It is important to know that ALL money is God's. If a person lives with this thought in their mind, money management and the respect of income gained will create a better life and frame of mind.
Don't believe someone if they say that filing more than once is impossible. The second time the rules change some, but can be done. Tarnishment stays on credit reports for ten years, but some lenders work with the situation anyway. This may cause a higher charge in interest rate than someone who has not filed. There seems to be more willingness to deal with people who have filed under Chapter 13 than those who filed under Chapter 7.
When deciding how to file bankruptcy, remember that the rules do not allow the trustee to seize all assets and sell them to cover the debts. He only has access to non-exempt assets. When making the final decision know how important to look at the whole picture. Knowing personal boundaries and ultimate goals is crucial to focus on in order to not get into further trouble. If there is any doubt about what decision to make concerning financial issues that are important to contact a professional as soon as possible. Be patient and wise in whatever decision is made.
http://www.christianet.com/bankruptcy/bankruptcyrules.htm
