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Bankruptcy: What to know about filing to get out of debt

You were always good with money, but after a serious medical situation, you found yourself falling behind in debt. Now, you think there's no way out.

Fortunately, that isn't true. Bankruptcy is one option that could help you get back on track.

What happens when you file for bankruptcy?

When you file for bankruptcy, you'll need to fill out several forms that show your income, debts and other assets. You'll petition the court for a bankruptcy with this information. The court then sets up a meeting with creditors, and your trustee begins to handle your case. The creditors don't necessarily have to attend your bankruptcy meeting. If they do, they get the opportunity to ask questions about the case. You can have an attorney present at the meeting.

After the meeting, the trustee begins to sell your assets if you're going through a Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, you sell no assets but begin paying back your debts over a 3- to 5-year period.

With a Chapter 7 bankruptcy, the court-appointed trustee sells assets that are not exempt. Since the goal of bankruptcy isn't to make you start from scratch, certain assets, like your primary vehicle and your home, your Social Security check or retirement savings, won't be sold off to pay back your debts.

What happens when you have no assets left to sell?

The goal of the trustee is to pay back as much as possible by selling your assets. Once that's finished, the Chapter 7 bankruptcy ends. The court finalizes it, and the final debts are discharged.

Bankruptcy gives you a fresh start. If you have questions or concerns about any of these matters, talk with a bankruptcy attorney as soon as possible about your debt relief options.

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Gipson, Norman & Root
450 N. Texas Avenue, Suite A
Webster, TX 77598

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