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What Happens In Bankruptcy?

What actually happens during bankruptcy is the release (or total forgiveness) of your debts. To get this release, you must provide some financial documents and official government paperwork to formally request that your debts be forgiven. After the full bankruptcy process is completed, you will receive a “discharge” that permanently eliminates your debt.

Providing Paperwork and Finishing Forms

You will be required to provide certain paperwork including a list of your creditors, your current income, and at least two years of taxes. After you have provided the paperwork and take a small required bankruptcy class, you can then review and sign your petition with your attorney. This gets everything ready so that your case can be filed. There are usually also court costs and attorney fees required for the process as well.

Filing the Bankruptcy Case with Federal Court

Image depicting What happens in bankruptcy

You or your bankruptcy attorney will then file your bankruptcy request with the federal court. During a filing, you must submit a full, completed bankruptcy petition that is accompanied with other required paperwork and documentation. Usually, you must also submit your last 60 days of income and a copy of the certificate that shows that you have taken the required bankruptcy class. After the case is filed, a trustee (a bankruptcy-reviewer) will automatically be assigned to the matter to review the case. Also, a bankruptcy meeting will be set out 30-40 days into the futurewhere you will briefly meet with this trustee and any creditors who wish toattend.

The Bankruptcy Meeting and Required Follow-Up

After the case is filed, you will go to this single bankruptcy meeting.  The trustee will ask you a series of questions related to your case. Even though the bankruptcy case is already filed, certain follow-up work will be required with your attorney and sometimes the trustee. This follow-up work will likely occur both before and after the bankruptcy meeting.
It is critically important to follow the instructions of your attorney and bankruptcy trustee to make sure that your Chapter 7 Bankruptcy is successful. You also must take your second bankruptcy class and make sure that the certificate is filed with the court.

Do You Need Bankruptcy to Actually Happen for You?

The above description of the chapter 7 bankruptcy process hopefully dispels any initial fear of what actually happens during bankruptcy. The bankruptcy process is not as stressful as you may think.  In fact, the bankruptcy process usually instead brings desperately-needed stress relief. Contact a bankruptcy attorney for a free consultation to allow you to consider whether bankruptcy is right for you.

3 SIGNS THAT YOU NEED TO FILE FOR BANKRUPTCY

What are clear signs that you need to file for bankruptcy? This question can be answered by in a few basic ways.  There are three basic signs that strongly indicate that bankruptcy is something that you may want to consider.

Sign #1: Staying in the Same Place or Worse for Years

Are your finances currently impossible? If you believe that you will be in the same place still in 2 to 3 years, you should consider bankruptcy.  You should be able to substantially pay down or settle your debts within a reasonable time period such as 2 to 3 years.  If this is impossible, you should probably get theChapter 7 debt release to start over. Do not get into a situation where you were just “spinning your wheels.” If a 2-3 year plan to reduce your debt is not possible, all signs point to you needing to file bankruptcy.  

Sign # 2: Collection Destroying Your Ability to Pay Bills

Another sign that bankruptcy is right for you is when collection activity is destroying your ability to pay bills.  If your wages start getting garnished, it may quickly become impossible to pay your monthly bills.  A garnishment can easily “throw a wrench” into your finances that causes everything to shut down.   A bank account freeze can have an even worse effect.  Large amounts of money can become instantly frozen in your account.  If acollection is becoming as aggressive as a bank account freeze, then it is probably time to file bankruptcy.

Sign #3: Your Credit Future is Indefinitely On Hold

3 Signs that you need to file bankruptcy

When your credit future is on hold indefinitely due to defaulted accounts, you may need to file bankruptcy. Having bad credit can make life very difficult. It is also another clear sign that bankruptcy may be good for you. Do not put future dreams such as buying a house or other items on hold indefinitely. Protect yourself and provide for your future by exploring bankruptcy options.

Bymaster Bankruptcy Law Offices Offers Free Consultations.  To schedule your free initial visit, contact our office at 317-769-2244.

Cause of Bankruptcy

The Number One Cause of Bankruptcy: Lack of Financial Knowledge

Number One Cause of Bankruptcy: Lack of Financial Knowledge

You can always trace back an immediate cause for bankruptcy. Ultimately, the number one cause of bankruptcy is lack of financial knowledge. Without adequate financial understanding, you can easily set up your life in a way that leads to bankruptcy. There are, however, three basic financial concepts that if applied will usually prevent any future need for bankruptcy relief.

Live Way Under Your Means

Most people file bankruptcy because they are living paycheck to paycheck. The root of this cycle, however, is that most people live right at or above their means. The solution is simple: learn how to live way below your means. If your living expenses only consume 50% of your income, then your financial life will always be easier. You will also have money to save and invest.

Learn how to live well without paying the accompanying costs that most people accept as part of the package.  Many financially-savvy people are living practically for free due the living situation they have developed over the years. Still, others decide to spend every bit of their business or job income on their house mortgage, cars, and other frills of life.  The truth is in the numbers.  The truth can be found through gaining financial knowledge and then boldly applying it. Sometimes this even requires doing the opposite of everyone else with your income.

Save and Invest Left-Over Money

It almost goes without saying that the next step is to save and invest all leftover money each month.  Investments can increase your income.  Savings can also prevent financial disasters when something unpredictable happens.  As you save and invest, a cycle develops where life gets easier and easier.

Make Sure All Gaps are Covered

It is also important to cover all the gaps in life. This includes important things such as insurance, following legal requirements, and having a balanced and thoroughly-thought-out life.  Remember, all financial “gaps” should be covered in your life at all times.  A small hole in the armor of your financial life can allow a dart to pass through that can wreak havoc and lead to bankruptcy. You cannot plan for every possibility in life. It is vitally important, however, to close all obvious gaps that could lead to serious financial problems.

Conclusion: Application is the Key

Apply these three financial concepts to your life.  Your increased financial savvy will not only prevent bankruptcy but also make your financial life much easier.  Remember, you can actually end up acquiring large amounts of financial knowledge with very little real-life benefit.   Only bold and disciplined action will your life actually change for the better.

 

Why Do Millionaires File Bankruptcy?

Millionaires – Why Do They File For Bankruptcy?

Millionaires file for bankruptcy due to the simplest reason: numbers.  They are always dealing with large numbers with their investments, assets, and banking endeavors.  Sometimes these numbers can quickly get millionaires into financial trouble that cannot be overcome without bankruptcy.

Millionaires’ Investment Downturns Cause Bankruptcy

Millionaire Bankruptcy

Investment downturns can be devastating.  We have all seen what the market can do to stock funds.  We have also all seen a business endeavor fail, even if it was only on a small scale.

The downturns that millionaires face with the business and investments that they own are multiplied due to the shear size of the numbers involved.   The asset sheet of a millionaire can decline rapidly.  These downfalls can quickly plunge a millionaire into financial ruin.  Sometimes only bankruptcy can satisfy all of their creditor obligations.

When a millionaire’s income source is strong and constant, they have the ability to indulge in an expense lifestyle.  If this lifestyle cannot be supported after a financial downturn, the assets of the millionaire are depleted quickly.   Some are unwilling to make major life changes quickly.  This is another source of millionaire bankruptcies that hit the headlines each year.

Millionaires will also have their Corporations File For Bankruptcy

The news also covers a multitude of millionaires that file bankruptcy cases on their corporations (that they own or partially own).   Bankruptcy is frequently the natural demise of any large business endeavor.  In fact, it can create a fair and proper venue for equally distributing the business’s remaining money and assets.  Sometimes, a Chapter 11 case can even result in the successful reorganization of the business. The news usually portrays these “millionaire” bankruptcy cases in a negative light whether or not the case was best for the corporation.

Millionaires Recover After Bankruptcy

Somehow millionaires frequently recover after bankruptcy.  Remember, millionaires usually know how money works.  They are also familiar with large numbers.  Millionaires frequently spearhead large projects even after bankruptcy.  Bankruptcy always offers bold relief after extreme economic downturns.  After bankruptcy, new financial opportunities abound.  Millionaires are not an exception to this rule by any means.  They are able to act on these opportunities and find financial success once again.

Right Time to File Bankruptcy?

When Is the Right Time to File Bankruptcy?

When is the right time to file bankruptcy?

Timing can mean everything in life. Bankruptcy is no exception. When is the right time to file bankruptcy?  A few basic tips about the right time to file bankruptcy can be very helpful.

1. File Before Collection Becomes Too Aggressive

If you were considering Chapter 7 or Chapter 13 bankruptcy, it is better to file your case early. If you wait too long, aggressive collection may follow. If you’re considering chapter 7, a garnishment can make it much more difficult.  The garnishment will take a substantial portion of your paycheck, taking away finds you could otherwise use to pay for your bankruptcy fees.

2.  File After You Have Received and Spent Your Tax Refund

In Indiana, it may be wise to file bankruptcy after you have received and spend your tax refund. In Indiana, only a very low exemption is allotted to protect your tax refund. Therefore, if you were owed a tax refund in the upcoming weeks or months, you may lose a portion or all of that tax refund during the bankruptcy.

3.  File As Soon As You Discover Bankruptcy Is Right For You

Many people put off bankruptcy for years.   If you have determined with an attorney that you need to file for bankruptcy, file your case as soon as possible. If you are carrying a heavy debt load, talk to an attorney right away. People wait for years to file bankruptcy much to their disadvantage.  After you file for bankruptcy, you can get a fresh start to move on with your life.

4.  Always Follow the Advice of Your Attorney

Ultimately, the greatest guidance as to the right time to file for bankruptcy will come from your attorney. A consultation with a bankruptcy attorney is many times free. If you follow the advice of a bankruptcy attorney as to the right time for bankruptcy, you can avoid costly mistakes and unnecessary stress.

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