Filing Bankruptcy – The Process
Filing bankruptcy may not be easy as some people think it would be. Under the new Bankruptcy Code, people considering bankruptcy needs to submit more documents to qualify for the procedure. Right after submission of a petition for bankruptcy, detailed supporting documents and forms must be ready at hand within 45days of submitting the petition, if not, then the debtor’s case would be automatically dismissed and he would have to re-file for the bankruptcy including re-paying the attorney’s fees. The debtor must then gather up all bills, payment receipts, income statements, and also tax returns to be handed to his case trustee when needed.
Another preparation in filing bankruptcy is the debtor’s certificate of completing a special credit course and pre-bankruptcy briefing, administered by an agency-provider that is certified by the US trustee or bankruptcy district administrator.
After the initials of filing bankruptcy, the debtor becomes protected from creditors’ actions (‘stopped’ lawsuits, wage grasp, or payment demands) through a legally imposed ‘stay’ – one of the most sought after benefits for filing bankruptcy. However, the ‘stay’ may not always be ‘automatic’ since the new bankruptcy law has put a span-limit in putting the ‘stay’ into effect. The 30-day ‘stay’-limit is imposed particularly for those bankruptcy filers who had already been once discharged from a previous bankruptcy case. Those who had been discharged twice, receive no ‘automatic stay’ unless given court-approval. Nevertheless, a limited ‘automatic stay’ may still be expanded upon the debtor’s extension-request.
Here are other important notes on filing bankruptcy:
Once a debt is ‘discharged’ then the debtor is released from the liability of paying for it. The creditors are prohibited to collect any payment for discharged debts (except those secured/lien-protected debts), or to make any form of personal contact with the debtor.
Not all debts are discharged and are therefore still subject to debtor’s payment. These debts are not dischargeable due to public policy reasons (based on the debt’s nature as with tax or employee’s wage, or the fact that the debts were from the debtor’s improper behavior as with damage to property).
The court generally grants the discharge from debts as soon as practicable for the debtor – 4mos.-4yrs. However, the court may not give the debtor’s discharge if he fails to complete his pre-bankruptcy and financial counseling course. The debtor will usually automatically receive a discharge once there are no more objections proceedings. The bankruptcy court mails a copy of the order of discharge to all creditors, the US trustee, the case trustee, the trustee’s attorney, and of course to the debtor and his attorney.
A creditor who is also the debtor’s employer may not end the debtor’s employment solely because he didn’t pay the discharged debt.