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How does the bankruptcy process work?

On Behalf of | Apr 2, 2022 | Bankruptcy |

Bankruptcy is the legal process that allows you to get rid of debts you cannot pay. Because someone will lose out, usually the creditors, the process is a serious matter where the court verifies that you simply are unable to make payments on your debts.

According to the US Courts, there are several steps in the process of filing bankruptcy that will ensure the court receives all the necessary information and can make a final fair ruling.

The beginning

The beginning of a bankruptcy case is when you file your petition with the court. In your petition, you will list all your debts and creditors. You also must provide information about yourself and your financial situation.

Keep in mind that the whole process must follow the Bankruptcy Code. This is a federal law that mandates certain steps and requirements.

The court

Every state has its own bankruptcy court or courts. You must file your petition with the correct court that oversees bankruptcies based on where you live.

While it is the court that has the final say over all matters in your case, you will deal mostly with a trustee. The trustee is the person who will review the information you provided, ask you questions about it and present the final investigation results to the court. You probably will never go to the actual courtroom or see the judge in your case.

The end

Once the trustee presents your case to the judge, he or she will then make a ruling. The court can dismiss your case, which is the same as throwing it out. This may happen if you fail to provide information or break a bankruptcy law. The other and more desirable ending is the court discharging your case. A discharge means the court agrees with your arguments and wipes out your debt or accepts your repayment plan, depending on the chapter you file. If you have a repayment plan, the final step will be a discharge once you complete the plan.