Bankruptcy

How Does Bankruptcy Work?

Once you decide to file for bankruptcy the trustee completes the paperwork with you and files it with the federal government. Your creditors are then notified by mail and are advised to deal with the trustee from then on. For secure debts such as car loans and mortgages, you can choose to continue to deal with those creditors under the original agreement you made. If you want to end a secured debt and have that creditor’s loss included in the bankruptcy, you must turn the secured asset over to the trustee when you become bankrupt.

How Long Does Bankruptcy Take?

For someone filing bankruptcy for the first time, you are normally out of bankruptcy in 9 months, this is called your “discharge”. If the government income rules apply then this period is extended to 21 months. A second bankruptcy requires you not be discharged for at least 24 months, 36 months if the government income rules apply.

What Does it Cost?

The payments in a bankruptcy consist of the trustee’s basic fee and any requirements to pay surplus income as required by the federal government income rules. The trustee will review the bankruptcy process with you prior to filing so that you will understand the costs involved.