One of the most difficult decisions that you could make is whether or not you should file for bankruptcy. For individuals, there are essentially two types of personal bankruptcy, which consist of Chapter 7 and Chapter 13. Designed to offer the filer a fresh start in life by removing certain debts, a Chapter 7 bankruptcy will rid the filer of credit card and other unsecured debts. A chapter 13 bankruptcy, alternatively, is a court-approved payment plan where the filer is required to repay a predetermined percentage of their debt. The determination of which chapter to file will be based upon the filer's disposable income, if any, after paying their required monthly bills.

The first thoughts for many people who file for bankruptcy are of their assets and whether or not they may lose their home.  In a Chapter 13 repayment plan, the majority of filers are allowed to keep their property in exchange for repaying a portion of their debts.  A Chapter 7, however, is designed to be a liquidation process that frequently causes the sale of non-exempt property.  Which property is considered non-exempt in a bankruptcy proceeding?  Each state has its own laws pertaining to the amount of property that a person or married couple can keep without needing to be concerned about it being liquidated. 

The official process of bankruptcy starts after filing a petition with the local bankruptcy court.  This could either be done individually, also called pro se, or with the help of an attorney.  For most people, hiring an attorney is the best way to make sure that every form is completed correctly and in order to make sure their assets are secured as much as possible.  Upon the filing of a bankruptcy petition, the court assigns a trustee to the case and sets a date for a Meeting of the Creditors.  Even though creditors of the filer are invited to attend, they don't need to do so.  The filer, on the other hand, is required to attend and will be questioned by the trustee, under oath, while having the meeting recorded.  This meeting is normally the only appearance needed from the filer unless special conditions are present. 

Following the Meeting of the Creditors, commonly referred as the 341 meeting, the creditors will have 30 days to object to the filers property exemptions and another 30 days to object to the discharge if the filing is a Chapter 7 bankruptcy.  In a Chapter 13 proceeding, creditors might object to the payment plan but the discharge will not be granted until the payment plan is complete.  A Chapter 13 bankruptcy can last for up to 5 years before the payments are completed and a discharge is issued.  After the discharge, the bankruptcy case will be closed and the method will be complete. 

This article is to be used for informational purposes only.  It must not be used as, as opposed to or along with professional legal advice about bankruptcy.  Anyone who is considering filing a petition for either personal or business bankruptcy should consult a licensed attorney in their area for more information and/or legal guidance.