How Does Personal Bankruptcy Work?
Bankruptcy laws were created in order to extend help to people who are seeking for assistance on their debt problems. The debts should be those which were honest debts incurred while living a decent life and not for the purpose of deceiving the government to discharge debts acquired from unnecessary and luxurious spending.
In this light, there have been laws passed to guide individuals in filing bankruptcy . One of the initial requirements is getting and securing a credit counseling certificate mandated by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCA). Credit counseling must take place 180 days before the application. Another requirement is having a means test which will determine if the debtor’s application holds basis. There is a formula being used per state which takes the individual’s income and compares this to the median income in the state he/she is, as well as under a family number which he/she has. The goal is to identify which particular type of bankruptcy chapter the individual may apply for.
Once the application reaches the court, a trustee is assigned for the case. Meetings with the bankruptcy applicant and his/her creditors will be scheduled. The trustee is responsible in ensuring that the bankruptcy applicant’s statement of debts, liabilities and assets are accurate for the proceedings to carry on. Personal bankruptcy process may take 4 weeks and above depending on the course of the confirmation of the judge, the hearings, liquidation of assets and distribution of its proceeds will take.
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