Rules Made By Bankruptcy Courts For Effective And Successful Bankruptcy Filing

Financial difficulties can crop up anytime and due to various reasons. Some of the most significant factors contributing to a severe debt crisis include reckless use of credit cards and an irresponsible habit of taking loans over and over again without caring for future consequences. Monetary problems can very well make your life completely unmanageable if not dealt with in an organized and effective manner.

Bankruptcy is one of the various debt solutions that can help people in severe financial crisis overcome their problems conveniently. However, there are various other solutions other than bankruptcy that can also prove to be helpful in managing debt problems. A knowledgeable attorney can help in providing adequate information on all your legal rights and options.

In case bankruptcy turns out to be the most suitable option for you, it is extremely important for you to know the various rules made by the bankruptcy courts to make your petition valid and successful.

For individuals to file for bankruptcy, it is required for them to complete a credit counseling course. It is essential to complete this course under the guidance of a certified credit counselor. During bankruptcy filing, the Bankruptcy Counseling Certificate must be submitted to the court in order for your petition to be accepted by the court.

The court has also made it compulsory to complete a means test to prove that your annual income is low enough to make you eligible for bankruptcy filing. The means test aims at proving that your annual income does not surpass the median income for a family of your size in your state.

To file for personal bankruptcy the court demands some essential documents that can be used as valid records for your current annual income and current personal expenditures. Some of these required documents include an income proof for the last six months prior to the bankruptcy filing, a copy of your paycheck, a pay stub, bank records, rental agreement and any other kind of income proof that had been received by you within a period of six months prior to the bankruptcy filing.

Bankruptcy filing can only help in clearing unsecured debts. It cannot help in dealing with secured debts such as secured loans, court fines for offenses, alimony and child support, student loans, tax debts etc.

Bankruptcy courts do not necessarily seize all your valuable assets. The court has made several provisions in the bankruptcy law that help you in retaining some of your assets like furniture, clothing, jewelry, household items, tools, insurance, pension funds, inexpensive vehicles and in some special cases even your home. The extent of allowance largely varies from state to state and depends on individual situations and requirements.

Some states provide individuals with the choice of federal bankruptcy exemption in the place of state bankruptcy exemption. In order to make the right choice, it is important to evaluate and compare the values of your assets. The only rule however is to stick consistently to one of the options throughout the time.

The court allows you to file for bankruptcy as many times as your financial situation requires. Just because you have filed for it once does not mean that you cannot file for it again in the future.