If you’re considering filing for bankruptcy, you should know what to expect from the process. Of course, your lawyer will walk you through the steps once you’re ready to file, but it’s recommended that you know what each step will be and how long it will take. The more information you have going into this legal process, the fewer surprises you will encounter. Consider the most important steps, and then schedule a meeting with a lawyer to start your case.
Which Chapter Is Right for You and Which Debts Will Be Discharged?
The first step is to get the information you need about bankruptcy, starting by contacting a lawyer to learn which chapter is available to you since most debtors only qualify for one. Chapter 7 is among the most popular options because it discharges unsecured debts without the need to repay your creditor. However, if you make above the median annual income for South Carolina, you likely won’t qualify for this chapter. Your lawyer will help you take the bankruptcy means test to determine this.
If the means test shows your income is too high for Chapter 7, you will likely have to file for Chapter 13 bankruptcy. This option requires you to repay your creditors over the next three to five years, so expect to create a payment plan that the bankruptcy court judge must approve before you start paying your creditors back. With this chapter, you can keep all assets, but your debts will only be discharged once the payment plan is over in a few years.
Once you know which chapter is available to you, you should find out from your lawyer which debts will be discharged and which assets you can likely keep. At that point, you can move forward with the process with your bankruptcy attorney’s guidance.
Which Documents Do You Need?
Your attorney will let you know which documents to gather once you’re ready to file. In general, you’ll need:
- Paystubs from the last six months to prove your income
- Proof of any other income from the past six months, such as alimony or unemployment benefits
- At least two years of tax returns
- At least two months of bank statements
- At least two months of retirement and investment account statements
- A copy of your driver’s license and Social Security card
These are the basic documents you’ll need to file. The trustee assigned to your case will likely also request valuations for your home, car, antiques, collectible items, and other possessions of value. Additionally, you will likely need to show statements showing the balance on your car loan, mortgage, and credit cards.
Your trustee will also ask you to list household goods and their approximate value. Your lawyer will help you get these documents together and then fill out forms to file with the bankruptcy court in South Carolina.
What Happens After You File?
Once you file and stop paying on the debts that will be discharged, the court will put an automatic stay in place, and your creditors cannot contact you anymore. At that point, you will turn in the required financial paperwork and attend any hearings set by the court. If you’re filing for Chapter 13 bankruptcy, you must attend a repayment plan meeting outlining your payments toward certain creditors.
You will also need to complete a credit counseling course. When you’re done with it, file the certificate with the bankruptcy court to show you’re done with this requirement. If you file for Chapter 7, your debts should be discharged within four to six months. If you file for Chapter 13 bankruptcy, your debts will be discharged and your case will be closed once the repayment period ends. This could take three to five years, depending on your payment plan. At that point, you will be done paying for old debts and can get the fresh start you deserve.
If you’re ready to start the bankruptcy process in South Carolina, call The Howze Law Firm LLC at 803-266-1812. Our attorneys have years of experience helping clients get a second chance when managing finances, and we can do the same for you when you hire our team.