Mandatory credit counseling – For all cases that are filed after 17th October 2005, you are required to obtain a mandatory certificate from any approved credit counseling agency, before you file a bankruptcy.

File petition, schedules and Statement of Financial Affairs with the Court – Your case commences when you file a petition, Schedule and Statement of Financial Affairs with the Court which you have signed under penalty of perjury. As soon as this is done, an order of automatic stay prevents your creditors from continuing further collection activities.

Mandatory meeting with the Trustee – This will occur after one month since you have filed the case. A Trustee is a person appointed by the Court who will liquidate any non-exempt asset you have and distribute these funds amongst your creditors. The Trustee also monitors your case. He however, does not represent you in your bankruptcy.

Objections by creditors and Trustee – Your creditors have 60 days from the time of your first meeting with the Trustee to file a complaint objecting to the discharge of their debts or to your entire discharge. There are various grounds on which they can do this such as fraud, false statements on a credit application, willful or malicious injury and some other. If any creditor files such a complaint there will be a trial and you would need to consult an attorney for your course of action. The Trustee has 30 days from his first meeting with you to file an objection to any exemption that you have claimed.

Financial management course – You are required to complete a financial management course for all cases files after 17th October 2005 before you receive your discharge. If you don’t submit the certificate of completion you won’t get your discharge.

Discharge – This is the last step. If nobody objects to your discharge within the 60 day period mentioned before, and you have completed all other requirements, then you are free to go. You will receive your official Notice of Discharge in the mail usually 2 to 6 weeks after the completion of the 60 day period. You will be discharged from all your dischargeable debts.

There are some other debts such as student loan, child support and alimony which you will still have to make payments for.

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• Bankruptcy for Individuals: What You Need to Know(socyberty.com) If you are planning to file for bankruptcy it is important to make the necessary preparation so that you can use the law to protect yourself. The discussion below would give you the basic information on what to expect and how to make this process simple.
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By going for a professional debt relief method, you can obtain expert advice and expert strategies to manage your debts. Given below are 3 types of professional debt relief method:

1.) Debt settlement - Debt settlement is a process by which you pay a partial amount to your creditors instead of the full amount of money that they owe from you. A debt settlement company can make this possible by negotiating with your creditors. The representatives of a debt settlement company will open a “trust account” for you which will act as a reservoir to save money for paying the creditors. However, debt settlement can have negative impact on your credit report. It can be avoided if your creditors can be persuaded to mention your payment as “paid in full” while reporting to the credit bureaus. If they refer to it as “settled”, it might negatively affect your credit report.

2.) Debt consolidation - This is a useful way of lowering monthly payments which can help you to become regular with your payments and thus obtain debt relief. Through debt consolidation, you’ll be consolidating all your unsecured debts into a single payment each month. You’ll find a number of debt consolidation companies for this purpose. 

The representatives of the debt consolidation company would comprehend how much you can pay per month by thoroughly analyzing your financial situation. Based on that, they would negotiate with each of your individual creditor to accept lower monthly payments. Once it is done,you can start making a single payment each month to the debt consolidation company in order to manage all your unsecured debts. The money that you deliver, will be distributed amongst all your creditors. A part of the money will be taken by the debt consolidation company as their fees.

3.) Credit counseling – You can receive expert financial advice relating to money management by going for credit counseling. Credit counselors will help you to develop a plan to get rid of your debts.

How to choose a debt relief company

Though professional debt relief methods are good ways to clear debt, there are a number of reports of fraudulent activities of debt relief companies. You should be very careful in choosing a debt relief company. Moreover, you should give adequate effort to find a company which would give you good quality service at a reasonable price. Listed below are few tips relating to choosing a debt relief company:

a.) Before choosing a debt relief company, you should research well about them. That would help you to find a good debt relief company which offers their service at an affordable price.

b.) Go through the reports of the Better Business Bureau (BBB). You will get a lot of valuable information regarding debt relief companies.

c.) Look for success rates and the views of previous clients while selecting a debt relief company.

d.) Check if the company is eager to provide details about how they will utilize your money and how they will work. Always look for transparency in service.

Professional debt relief methods have become a popular way of managing debts. You can choose any such method to obtain debt relief. However, in order to avoid further financial trouble, make sure you do your homework well before choosing a debt relief company.

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 What are credit card consolidation loans?

Credit card consolidation loans are loans that you can take to pay back all your credit card debts at one. It is known as a consolidation loan as it allows you to consolidate your multiple credit card debts into a single loan which you can pay back with single monthly payments. Such consolidation loans are best taken when you have a property. You can keep your home as collateral and take a loan against it. The best part of taking such a loan is that since this is a secured loan the rate of interest that you get is a lot less than what you were paying on your unsecured credit card debts. This is mainly because if you fail to pay back the loan, your house will be foreclosed to pay for it.

 Should you take a consolidation loan?

Taking out a consolidation loan is one of the best ways to pay back your unsecured debts. However, you should be careful that you keep making regular payments on your consolidation loan. You should save some amount every month so that you can pay towards your consolidation loan. You should remember that defaulting on this one can have grave consequences like losing your house. Thus you should be careful about your spending habits if you want to lead a debt free life again.

Justine Williams is a financial advisor for EasyFinance.com. She brings an exclusive view on personal finance, frugality and nature of consumer financial goods and services like debt loan.

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