By Dan Marshall
People who are insolvent and want to regain their lost financial stability can opt to file bankruptcy so as to get debt relief. Basically, bankruptcy is a legal procedure mandated by the US Federal Court of Justice in order to safeguard both individual citizens as well as corporations from the vicious cycle of debt. Hence, debtors willing to file bankruptcy should be aware of the basics before moving forward.
What is BAPCA?
BAPCA is the abbreviation of Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Ever since the government enacted this amended law, filing for bankruptcy has become a lot tougher. Under this new law, debtors must proceed with their bankruptcy petition with the help of a registered attorney. Moreover, the attorney has to validate all the information provided in the bankruptcy petition as authentic with the help of relevant proofs.
Two most common types of bankruptcy
Here are 2 of the most popular types of bankruptcies known as chapters:
- Chapter 13 – Under this type of bankruptcy, debtors petition to the court requesting them to approve a suitable debt repayment plan. The court agrees to oblige with the requests after being convinced of the debtor’s inability to make the payments, even if he/she has a steady source of income.
- Chapter 7 – Under this type of bankruptcy, debtors will be able to get rid of all of their unsecured debts barring only the secured ones. The court may liquidate a part of the petitioner’s assets in order to meet the obligations of the creditors. The court will liquidate only the non-exempt properties in this regard.
Bankruptcy – What is the standard process to file it?
Here is the most preferred way people choose to go ahead with their bankruptcy petition:
- Working with a bankruptcy attorney – Bankruptcy is a complex legal procedure and so, the tasks involved in the entire process require a lot of paperwork to be done, besides filing the petition and other issues. People are allowed to file for bankruptcy on their own but it will invite a lot of risks and a single mistake may delay the case, in the meantime complicating the matter beyond repair.
- Type of bankruptcy – Debtors need to decide the type of bankruptcy case they are going to press for in the court. Hence, they must consult bankruptcy attorneys for advice whether to choose chapter 7 or chapter 13 bankruptcies based on their individual financial condition.
- Enrolling for credit counseling session – It is compulsory for the debtors to go through a credit counseling session held by government certified credit counselors. Moreover, the course too should be an approved one.
Lastly, debtors have to meet the creditors and their attorneys as a part of the bankruptcy process. The meeting must be held after 30 days have passed since the date of filing the bankruptcy petition. Bankruptcy petitioners have to take an oath during such meetings. Everything in the meeting gets recorded for future reference.