Most of us may know that bankruptcy is a way to eliminate and discharge the debt, but we’re still unaware of how it happens.
Not knowing what the bankruptcy process entails can be intimidating, especially if an individual is under financial stress.
Filing for bankruptcy isn’t as burdensome as many make it out to be—especially if you have a professional and reliable bankruptcy attorney in Reno to help you.
The bankruptcy process has six steps before your debts are formally discharged. Let’s take a look at the stages of bankruptcy so you can assess whether it’s the right option for you.
Step 1: Pre-Bankruptcy Counseling
Before filing for bankruptcy, an individual must meet with a government-appointment credit counselor who discusses the possibility of filing for bankruptcy in the upcoming six months.
You discuss your bankruptcy options based on your financial situation and start a personal budget in this meeting.
Step 2: Filing the Bankruptcy Petition
This petition is a document that categorizes and describes all your outstanding debts.
A bankruptcy lawyer is responsible for creating this document after assessing your financial situation and going over your financial documents.
Once your lawyer has collected the relevant information to draft the document, you can officially file it with the court. The court, in turn, will start your bankruptcy timeline.
Step 3: Issuing the Automatic Stay
The courts issue an automatic stay when you file for bankruptcy. This order prohibits your creditors from contacting you to collect your debts.
The bankruptcy court sends out a Notice of Filing and a Notice of Stay to your creditors, making it illegal to continue trying to collect on your debt. This effectively puts a stop to all collection proceedings.
If the creditors wish to contact you, they can only do so through your lawyer.
Step 4: The Creditors’ Meeting
After a month or two of filing for bankruptcy, your bankruptcy trustee will set up a meeting between you, your lawyer, and the creditors.
Creditors can lodge any complaints and present their case in the meeting, but this is very rare because it’s hard to contest a bankruptcy discharge.
Your trustee will ask a few questions in this meeting to put all financial concerns to rest in the presence of your attorney.
If you’ve filed for Chapter 7, the trustee will approve the filing after the meeting, and if you’ve filed for Chapter 13, the trustee will draw up a payment plan for the next few years.
Step 5: The Debtor Education Course
To finalize it all, you must complete the debtors education course, which takes around 2 hours to complete and can be taken online.
This course will help you create a budget, and manage money, and use credit wisely to prevent the risk of bankruptcy in the future.
Stage 6: The Notice of Discharge
This is when your debt is finally discharged.
Under Chapter 7, stage 6 is completed when the trustee doesn’t find any major problems with the bankruptcy filing. In contrast, under Chapter 13, stage 6 is done once the debtor pays off the agreed-upon payment and receives the Notice of Discharge.
Once your debts are discharged, you have a clean slate, and the world is your oyster!
If you need more help managing your finances and filing for bankruptcy, get in touch with Kalicki Collier today!
We have a team of experienced and reliable bankruptcy attorneys in Reno to help you easily navigate the process. We also offer tax planning and business planning services to our clients. Contact us here for more information.