Since there is a lot of confusion surrounding the bankruptcy process, it is better if you are aware of what to expect when you file for a Chapter 7 or Chapter 13 bankruptcy. The best way to do that, say Los Angeles based bankruptcy law firm https://recoverylawgroup.com/ is to hire experienced lawyers. In case, you are contemplating bankruptcy filing and haven’t yet hired a lawyer, you can call experienced bankruptcy attorneys at 888-297-6023 to discuss your case.
The initial process in either chapter of bankruptcy is similar; beginning with a consultation with a lawyer. You need to discuss your income, household size, your assets, debts and your reason for a bankruptcy filing. Once the information is available to your lawyer and you have discussed your expectations from the bankruptcy, the attorney will discuss the advantages and disadvantages of both Chapter 7 and Chapter 13. After being aware of all the facts, you can come up with a plan as to how you will proceed with the bankruptcy.
Once the bankruptcy chapter is decided, you are required to gather all essential documents required for filing of the bankruptcy petition. You can review the petition prepared by the attorney for its accuracy and sign it so that it can be filed in the bankruptcy court. After 1 week of the bankruptcy filing, you receive a letter from the bankruptcy trustee assigned to your case, which asks for specific financial documents supporting your bankruptcy petition. Beyond this, both chapters of personal bankruptcy differ from each other.
Chapter 7 bankruptcy
You are expected to have a phone interview with your bankruptcy trustee in this case, where the trustee asks about your bankruptcy petition and the supporting documents. Your attorney is not part of this conversation. 1 month after petition filing, you meet the trustee in-person at the Federal court house along with your attorney. Here you are asked a series of questions regarding previously discussed documents. Your creditors are also part of this meeting (341 hearing) and can object to your bankruptcy discharge. However, creditors rarely participate in the meeting.
Any secured debts (mortgage, car loan) which you have can be reaffirmed if you wish to keep the asset. Reaffirming a debt means that you will be liable for your mortgage or car loan and need to continue making monthly payments on those loans, irrespective of the bankruptcy filing. If everything goes as per plan, you will receive your bankruptcy discharge within 120 days of the bankruptcy filing. Discharge of debts means you are not liable for any debts.
Chapter 13 bankruptcy
No telephone call from bankruptcy trustee precedes the personal meeting in this case. Here also a Meeting of Creditors takes place within 30 days of the bankruptcy filing and lasts around 5 minutes, where you are asked questions pertaining to the documents attached with your bankruptcy petition. Apart from this meeting, your 1st payment (as per your repayment plan) to the bankruptcy trustee is also due within 30 days of filing. The trustee distributes these payments to your creditors depending on the secured debts you decided to keep, your unsecured debts and your income. This repayment plan lasts for 60 months. The payments are calculated with the bankruptcy attorney and trustee and depend on your disposable income. If you continue making payments on time, you will get your bankruptcy discharge after you make your final payment.