It's come to this. You have tried to stay afloat for months by taking out payday loans, or holding off on paying essential bills, or floating debts on a variety of credit cards. Robbing Peter to pay Paul can only go on for so long before the stress and bills catch up to you. So, now what?
Bankruptcy is a legal process that is established in the United States Constitution:
"The Congress shall have Power To...establish...uniform Laws on the subject of Bankruptcies throughout the United States...."
ARTICLE I, SECTION 8, CLAUSE 4
There it is. Congress is given the power to establish bankruptcy laws! But, what does this 18th century document mean to you? Well, it means that you can get out of all that burdensome debt and start fresh!
Congress established rules that must be followed in order to file for this helpful procedure. You can find those rules right here. Most Bankruptcy attorneys will be familiar with these rules and know the pitfalls and requirements Congress has set out.
Here's the long and short of it: you basically have to disclose all of your income, expenses, assets, and debts to the courts in order to free yourself of that oppressive debt. This information, along with a few supplemental questions, must be disclosed using the Official court forms, which can be found on the US Courts website. The local Federal Court in St. Louis also has rules and forms that must be used in conjunction with the official Federal forms.
It's imperative that you fill out the forms and jump through all the hoops or else your case will most definitely be dismissed, or worse. You could face criminal sanctions for failing to complete the process. It's best to check with an experienced Bankruptcy lawyer to make sure you are fully prepared to file your case. A bankruptcy attorney will collect the information from you and complete the forms using specialized knowledge and software.
You will also want to make sure you protect all of your property and assets from seizure.
Different states have different rules, and Missouri is no exception. Missouri exemption laws lay out the property you are allowed to keep without having to sell and pay off to your creditors. Without properly using your exemptions, you could lose property to the bankruptcy trustee who will sell the property to pay off your creditors. Noticing a trend here? It's a good idea to have someone who can navigate the trustee's procedures and properly apply the exemption laws to your case. That's right! A bankruptcy attorney is best suited for analyzing your situation and making sure you are well protected.
Once the paperwork is complete, it must be submitted to the court with all the required fees. The petition, statements, schedules, and other requirements are turned into the court clerk, who will submit them to the judge to begin the bankruptcy process. You must also provide proof that you completed a credit counseling course prior to filing from an approved credit counseling agency. You must also complete an approved debtor's education course once you case has been filed. A bankruptcy attorney must review the completed paperwork with you. You have to sign the paperwork in about a dozen places to attest that the information is true and correct.
Depending on your types of debt, income, and property, you may file one of several types of Bankruptcy. Most individuals who make under the median amount of income for a family your size in the state where you live will file a Chapter 7 bankruptcy. If you have un-exempt property or income above the median amount will want to file a Chapter 13 Bankruptcy.
In a Chapter 13 bankruptcy, you will also have to put together a plan to pay back your creditors some or all of the debt you owe them over the course of 3-5 years. Different types of debt get different amounts of money from your payment plan. If a debt is secured by property, such as a mortgage or car, they will get any arrearages and payments going forward. Tax debt will generally be paid in full. Credit cards and payday loans will get whatever is left over. Following national and local court rules and procedure, you'll want to structure your plan to pay back these creditors accordingly. The bankruptcy trustee will also get a cut of your plan payment for servicing these debts.
In a Chapter 7, you generally will not have to pay anything back to your creditors, but, as with everything legal related, there are exceptions. For example, you will have to pay any money for unexempt property, payment of debt back to insiders (family or friends), and any money you are entitled to, such as tax returns or insurance claims. There are other times when you'll have to pay back creditors, but it's a good idea to talk to an attorney to make sure that you won't pay back more than you should. The trustee will be searching around for ways to get you to pay back your creditors. This helps the process remain fair and just. Your bankruptcy attorney generally works with the trustee's office to review your payment plan to make sure it is affordable and complies with all laws and procedures.
Once you successfully navigate this process and provide all the requested information and funds, you will receive a discharge. This is an official order stating that you are no longer obligated to pay back the debts which you listed in your bankruptcy case. You're free! Now, as I stated before, there are some exemptions. If it turns out you were fraudulent or lied somewhere along the way, the court can take back this discharge. Also, if someone dies within 180 days of filing for bankruptcy, you will have to turn that money over to the trustee. Generally, you can only receive a Chapter 7 discharge every 8 years. If you fall into hardship before those 8 years are over, you can always file a Chapter 13 bankruptcy, but you may have to pay back your creditors, but on your terms.
This is a very abbreviated summary of how to file bankruptcy. The Federal Courts have an extensive collection of information to supplement this guide. Read it all. And, here's the best piece of legal advice you'll receive when contemplating filing for bankruptcy: Get professional help! There are so many opportunities to go wrong that paying for an attorney is a bargain compared to the consequences you would face otherwise.
Is an attorney affordable? Most definitely. When you consider the sheer amount of debt you are carrying, an attorney charges only a fraction of that amount to wipe it out entirely. An attorney will answer your questions and alert you to any trouble before your case gets filed so that you can avoid the headache and heartache that may come when the trustee wants to take your property. It is extremely difficult to get out of Bankruptcy trouble once your paperwork is filed with errors. Having an attorney can alert you to issues upfront before the court sees anything.
Since 1997, the St. Louis attorneys at The Law Office of Tracy A. Brown, P.C., have helped hundreds in Saint Louis stop creditors from harassing, garnishing, and threatening clients through Chapter 7 and Chapter 13 bankruptcy filings that alleviate excessive debt. Contact us today to free your future from your past.