Filing for a Chapter 7 or Chapter 13 bankruptcy may seem like a pretty straightforward process: hire a qualified bankruptcy attorney, submit your assets and debts to the bankruptcy courts, and wait six to nine months for your debts to be discharged or re-arranged. While you may want to leave the finer details to declaring bankruptcy up to your attorney, it pays to know the fine print of a Chapter 7 or Chapter 13 bankruptcy.
So if you're ready to learn the finer details of declaring bankruptcy, take a look:
Creditors May File a Dispute Against Your Petition
When you file for a Chapter 7 or Chapter 13 bankruptcy, creditors have the right to file a claim against your petition. Creditors usually do this in an attempt to get your petition thrown out, as this means they'll be able to collect on what you owe them. If this happens, don't panic: your bankruptcy attorney will be able to help you navigate your way around a creditor who wants to fight back. Ultimately, the bankruptcy courts will decide in a party's favor - and if they decide in yours, you'll be able to move on with your proceedings.
You'll Be Granted an Automatic Stay
As soon as you submit a petition for a Chapter 7 or Chapter 13 bankruptcy, you'll be granted an automatic stay by the courts. This stay means that creditors must stop any and all actions to collect on your debts. If a creditor attempts to contact you, let them know that you've filed and refer them to your attorney. If they continue to persist, you can take legal action against them and possibly be awarded punitive damages.
Student Loans Are a Challenge
Usually, student loans are exempt from any type of bankruptcy, meaning you can't get rid of this debt. However, there are exceptions to this rule - and if you're up for the challenge, you may be able to get the courts to discharge your student loan debts. Ultimately, you and your bankruptcy attorney must be able to prove that paying student loan debt will be fundamentally detrimental to an acceptable standard of living. Be prepared for a fight, as bankruptcy courts will look for any excuse to dismiss your claim.
Knowing these finer details of declaring bankruptcy will give you the knowledge you need to understand what's needed to successfully discharge your debts.