Claiming Bankruptcy should not be entered into lightly.

Within 180 days of filing for bankruptcy, the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act makes it law that an individual must get some form of credit counselling.

This counselling is intended to make the individual aware of alternatives to filing for bankruptcy.

There are a number of bankruptcy types (called “chapters”), but Chapters 7 and 13 are the most common.

Although it involves the liquidation of almost all personal assets, including your residence if you own it, chapter 7 bankruptcy is often the preferred way to file.

However, after all relevant assets have been liquidated, any outstanding debt (there are exceptions, such as tax), is cancelled, allowing a totally fresh start.

If an individual does not want to be forced to sell all their assets, chapter 13 bankruptcy removes this need altogether, by putting in place a repayment plan, debts being paid in full over a 3 – 5 year period.

Some individuals file for chapter 7, despite having sufficient income to enter into a chapter 13 repayment plan. To ensure that repayment is made when ever possible, the legislation introduced in 2005 requires all applicants for chapter 7 to complete a means test

Not hiring a lawyer is a false economy. You will need help to fill in your details for the BAPCPA’s means test and a lawyer will help decide the most advantageous form of bankruptcy to file under.

Also, once a lawyer is acting for you, “automatic stay” comes into effect. This means that creditors can no longer approach you for money. All creditors have to deal through your lawyer.

You will be required to draw up a list of debtors and a list of your assets. These will be reviewed at the meeting of creditors (what’s called a”341 Meeting”). where you have to answer a series of questions on oath.

The court decides, in a chapter 7 filing, the assets to be sold and the proceeds distributed amongst your creditors, any remaining debt is then written off and you are no longer liable, resulting in a clean financial slate.

If, after the means test, it is shown that an individual is in a position where full repayment of debt can be made over a 3- 5 year period, a chapter 13 filing is made and a repayment plan introduced.

Under chapter 13, the notice of discharge is served 30-60 days after the repayment plan has been completed and fulfilled. Under chapter 7, creditors can legally challenge the discharge on the 60th day after the meeting of Creditors. If no representations are made, notice of discharge is issued a few days later.

If you are contemplatinghow to claim bankruptcy, I recommend that you visit www.howtoclaimbankruptcy.net for more free information, including advice on how to restore your credit position after bankruptcy has been discharged. Grab a totally unique version of this article from the Uber Article Directory