How to File Bankruptcy

Video Transcript

"So you're looking at filing bankruptcy. Let me give you a few things that you need to consider during this very serious situation. Before you file for bankruptcy, I highly recommend that you look into speaking with a consumer credit counseling agency. There's two reasons for this. First off, you may not realize that bankruptcy perhaps is not the only option. Additionally, all of the items that you prepare in your budgeting process, and in your listing of debt that you will have to do with a consumer credit counseling agency, is the same thing that you'll have to do before you prepare to have to go to an attorney to file for bankruptcy. Now you'll need to realize that if the consumer credit counseling service is in agreement that you're going to need to take bankruptcy because there's just no other option, then they will recommend a local attorney, or maybe several local attorney's that you can visit to prepare for this bankruptcy proceedings. There are two different types of personal bankruptcies, you have chapter 13 and you have chapter 7. Chapter 13 is used more frequently than chapter 7, and rightfully so. In chapter 13 bankruptcy you will do a filing that simply protects you from the advance of your creditors, and it will actually, sort of consolidate all of your creditors together, so that you have a manageable monthly payment that you will make to the courts, and then they will take those payments and pay out the creditors. You're not actually absolving any debt in a chapter 13 bankruptcy, what you're doing is you're making a planned and manageable monthly payment to all of your creditors. Now under a chapter 7 bankruptcy, you are absolving yourself of some debts. In the event of a chapter 7 bankruptcy, you will find that some of your creditors will decide that they do not want to be a part of your chapter 7 bankruptcy, and you may have some unfriendly activities to take place that your lawyer will need to know about. Now as for chapter 7 bankruptcy, this is a little bit more serious, I guess, for lack of a better word, than a chapter 13 bankruptcy. Under chapter 13, as we said, you're not absolving yourself of any debt, you are instead agreeing to pay all debt to all creditors, just at a manageable time period. Under chapter 7 it's not that way, you are actually absolving yourself from some debts, and then you're choosing to pay other debts at a more manageable rate. During a chapter 7 bankruptcy, you will be asked to, as I said, complete filings all that include, who you owe, how much you owe, and the amount that you've been paying. You'll also have to add to this information, what security you have for those loans, so that loans for instance, for your home, or for necessary automobiles, or for other necessary items, that you required to have for normal living purposes, or for business purposes, those will be included in your chapter 7 filing in such a way that you'll be able to retain those and make payment to those in a manageable way. Other types of debts, such as un-secure credit card debt, or personal loans, and in some cases medical bills, will be included in the filing in such a way that they will be absolved or written off, and you will not be expected to make payments on those. It is very important for you to realize that under chapter 7 bankruptcy, you only have an opportunity to make that type of filing one time every 7 years, so it's not to be taken lightly. Also your attorney will advise you as to when is the appropriate time to take a chapter 7 bankruptcy. Often times you may find that there are considerable amounts of debt that are still incoming, such as with medical expenses, and it would not be very wise to take a bankruptcy filing prior to the summation of all of those debts."