Compulsory Rules Made By Bankruptcy Courts For Making Bankruptcy Petitions

There are various debt solutions that can help individuals and organizations overcome disturbing financial difficulties. Based on the financial situations, people need to decide on the solution that’s more ideal for them. Bankruptcy is a legal procedure used by individuals and organizations to declare their incapability to pay off debts. Bankruptcy is one of the most significant debt solutions that can help individuals clear their debt burdens in a methodical way.

Personal bankruptcy is an option available for individuals to legally declare their inability to make debt payments. There are two types of personal bankruptcies, to cater to the needs of different debt situations, namely, chapter 7 bankruptcy and chapter 13 bankruptcy. Chapter 7 bankruptcy is ideal for individuals possessing non-exempt assets. The court takes hold of these assets to make debt payments to the creditors. Chapter 13 bankruptcy, on the other hand is a convenient option for individuals who make a decent income in spite of their severe financial difficulties.

Let us discuss in brief the various rules made by bankruptcy courts to enable you to make an effective petition for personal bankruptcy.

To file for personal bankruptcy, it is compulsory for individuals to submit documents that prove their annual income and monthly expenditures. Some of these documents include a list of creditors, proof of current personal expenditures, photo identification, copy of paychecks, bank records, a pay stub, rental agreements and all other documents proving the income during the last six months prior to the bankruptcy filing. Apart from these tax returns and transcripts from the last 4 years are also required to be submitted.
It has been made a compulsory rule of the court for individuals to complete a credit counseling course before the bankruptcy filing. The course must be completed under a certified credit counselor and the certificate must be presented at the court during the filing.
It is also compulsory to pass a means test to prove that you are actually eligible for bankruptcy filing. The means test is required to prove that an individual’s annual income is not more than the median income for the size of their family in their state.
Once the filing is complete, bankruptcy courts demand individuals to complete a course on Personal Financial Management. Courts have the right to shut down a case if they find out that an individual has submitted the Certificate of Completion without actually completing the course.
The court allows individuals to file for bankruptcy as often as their financial situation requires. However, it is required to maintain a definite time gap between two consecutive petitions in some cases. For example, an individual can file for chapter 13 bankruptcy without maintaining any time gap between two filings in a row. But in case an individual has filed for chapter 7 bankruptcy once, they need to maintain an interval of at least 8 years before they can make another petition.

A knowledgeable attorney can provide necessary information on all the important rules made by bankruptcy courts for successful and effective bankruptcy filing.