Choosing To Change Your Finances

What Occurs in a Debt Consolidation Bankruptcy?

by Luis Hawkins

A debt consolidation bankruptcy is a bankruptcy that combines all of your debt using a bankruptcy trustee and those debts are paid back in a manner that suits your financial situation. Your debts are paid back over several years. If you do everything that the trustee and bankruptcy court require, then your bankruptcy is discharged and all included debts will be wiped out. If you are thinking of filing for a debt consolidation bankruptcy, read on for what you can expect to happen.

You Need to Dig For Information 

You are going to need to do some digging to find information about your debts and your creditors. Your bankruptcy requires a lot of information so the trustee can contact your creditors and you can file on the right debts. You're going to need names, addresses, account numbers, the reason for the debt, and the amount that you owe. You're also going to need phone numbers or other ways to contact the creditor. Information about the debt itself, including what you used to purchase on that high credit card, and what assets you have are also going to be needed. If you have assets, you may need to have these assets looked at to see their worth. 

The Trustee Will Create a Payment Plan

A payment plan will be created with the bankruptcy by the trustee to pay back these debts. They may not all be paid back, and they may not be paid back in full, but your trustee will negotiate these debts with your creditors for you so you can pay back what you can and resolve these debts on time. Some things may require you to turn in assets to pay back the debt, such as vehicles, recreational vehicles, marine vehicles, and possibly other assets such as jewelry and furniture.

You Have to Report Your Income 

You need to report all of your income, in all forms, including winnings, inheritance money, tax refunds, and other money you have received. If you have any of this money and you fail to report it, it could end up causing your bankruptcy to be dismissed. This means you'll have to start the filing process all over again.

If you are going to be filing a debt consolidation bankruptcy, you may have a lot of questions about the process. Discuss this process with your debt consolidation process with your attorney so you know exactly what you should expect.