Bankruptcy Rules

The rules to bankruptcy are pretty straightforward because everyone, from corporations, to small businesses to regular people can apply. All you have to do is follow these simple rules and you should be on your way to becoming financially solvent again.

  • Firstly, you have to get together the following information. You’ll need all of the names of your creditors, their addresses and the amount of debt you owe each of them.
  • Next, you’ll need to get together a similar list of the amount and frequency of your income. This will also include a list of your property and of your monthly living expenses.
  • You then fill out a all of the required bankruptcy forms. These forms will vary depending on what state you live in and which chapter of the bankruptcy code you are filling under. This is also called a petition or a case file.
  • Take these forms to a local federal court to begin the process.
  • At this point the bankruptcy court will issue an ‘automatic stay’. This will stop all of your creditors from acting against you. They must stop all lawsuits and wage garnishment. They are also not allowed to contact you in any form. This includes telephone calls, personal visits and even email.
  • After around a month after you have done this, the court will set up a date for your 341 meeting. You MUST attend this and generally it only takes 10-15 minutes. The purpose of this is so your creditors can put up a fight, and make a case that you can indeed pay your debts to them without going bankrupt. They generally won’t put up too much of a fight unless they think you can pay 50% of your debt back.
  • If the court accepts your petition the trustee appointed by the court will liquidate any of your assets that aren’t exempt. There is no absolute definition of what an exempt asset is. The court will decide what you still need to keep on living, and then they will sell the rest.
  • Three months after this you will receive a discharge and your debts will be gone, as will your ability to get a loan in the near future.

These are the bankruptcy rules. They vary a little bit from state to state, but this is the general idea.