Most people know the general idea of what bankruptcy is, but if you’re claiming bankruptcy, what exactly happens? There are a variety of protections, rules, and choices that come up once you file your request for bankruptcy and it is worth it to know exactly what they are.
First of all, you get protection the moment you request bankruptcy. As soon as you put in your bankruptcy claim, all of your debtors are immediately stopped. This means overdue utilities can’t be shut off, collection agencies have to cease and desist, even law suits seeking payment from you grind to a stop. In some cases you can’t even be evicted for missing rent. All of this goes into effect immediately and it can be a big relief.
How the rest of the case proceeds depends largely on what kind of bankruptcy you are claiming. In the United States, if you have any source of regular income at all (even if it is not much) it is recommended you file for Chapter 13 bankruptcy. This kind of bankruptcy will require a single monthly payment from you for up to five years before excusing you from the rest of your debt, however, it allows you to keep your property, typically including a home.
There are other considerations as well. Some debt, such as student loans, will not be excused through bankruptcy, so you will need to continue to make payments on that or work out something with the creditor. There are also many variations from state to state that might grant you extra protection or influence your strategy. The best way to navigate this is to hire a lawyer, something anyone claiming bankruptcy is smart to do. Get your lawyer and look at all the options – chances are you can come out better than you thought!