Not every one is eligible to file for bankruptcy, but for those that can it is the chance to get a fresh start from the debts you have accumulated over the years, but this is not something that is automatic. The state of your finances, your assets and your liabilities, your monthly expenses and your monthly income are all taken into consideration, along with the amount of the debt you owe to your creditors. Your monthly income is obviously important, as this is what you will be living on during the period of your bankruptcy.
During this time, you will have no line of credit, and no credit cards, you will live completely on the income you bring in.
Before you file for bankruptcy to find out about your financial options, and they may direct you to see a bankruptcy trustee who will go through your information more thoroughly to see whether you qualify, and whether you will be able to live during this time. Once you have completed the paper work, the trustee will file the information on your behalf at the bankruptcy courts. You may requested to attend a meeting of your creditors should they request this so they can understand why you have all this debt, and you may have to be interviewed by the Superintendent of Bankruptcies too, for him, or her to understand your particular situation.
While you are in bankruptcy protection, your creditors will not contact you. If they do, you refer them to your trustee to handle, and provide them with the appropriate contact information.
You will have to provide monthly statements for your trustee that show your income and your expenses for each month, and if there is any extra income above the level you are allowed by the court, then a portion of this will be forwarded to the trustee to be shared between your creditors.
Now the length of your bankruptcy can vary, and the whole process undergoes regular changes to this system. Because of the economy and the increase in the number filing for bankruptcy, the rules and regulations for bankruptcy cases have become even more strict, and the length of bankruptcy has been lengthened too in some states. The length of time does depend on your financial situation, including your ability to pay back your creditors any of the amount you owe them, and various other considerations, including how you have responded to any questions asked by your trustee, and whether you attended credit counselling as required.
Throughout this process, the aim is that at the end of this period, you will be discharged from bankruptcy, provided all is well, and you will be free from the debt you accumulated. Then it is up to you to remain out of debt in the future, and by paying for everything with cash, you will be able to do this.
