Filing for bankruptcy may not be what you envisioned. However, it can be an effective avenue out of debt for you.
To successfully file for Chapter 7 bankruptcy, you need to ensure that you have all the relevant documents at hand. Upon receiving your case, the court can assign a trustee from a pool of neutral professionals. He or she will handle all the aspects that relate to your case, from the initial filing process until the end.
Helping with distributing assets
There may be no assets to distribute after a bankruptcy filing. However, if you have non-exempt assets, the trustee will collect them. He or she may choose to sell the assets at their highest price and then distribute the cash to creditors according to the priority levels in your applicable bankruptcy code.
Handling of creditor meetings
After your bankruptcy filing, a creditor meeting may occur within 6 weeks. You are therefore required to attend all the hearings and answer the questions presented. The bankruptcy trustee, in this case, will ask questions about your assets and income. The answers given should ideally match the information in your schedules.
Preventing fraudulent transfers
Some people may choose to transfer their assets to specific creditors before filing for bankruptcy. This preferential transfer is often done to make payments to specific creditors while leaving the rest.
If there is a preferential transfer, the bankruptcy trustee will review your financial statements, reclaim the assets and make a fair distribution to your creditors, based on the amount owed. This ensures that all creditors get equal treatment.
Protecting you from unfair asset liens
Creditors have the right to attach liens to your assets to collect their debts before you file for bankruptcy. A bankruptcy trustee will check these claims on your assets, verify the fairness and legality of the attached liens and confirm whether you can proceed to file for bankruptcy.
