• When a debtor files for bankruptcy, creditors must stop collection efforts.happy image by DOLPHIN from Fotolia.com
  
  With the state of the economy, it is no wonder that American consumers are having financial problems. If the creditors are calling your home, calling your job and sending you bills that you have no ability to pay, you may consider filing for bankruptcy. If nothing else, your filing for bankruptcy will stop the creditors from hounding you. Once you have filed bankruptcy, your trustee will be an intermediary between you and your creditors.
  
  

Filing Requirements

• Before a debtor can file for bankruptcy, he must have attended credit counseling with a government-approved credit counseling agency within 180 days prior to filing. After the debtor has completed credit counseling, he must file a bankruptcy petition to commence his case. With the petition, the debtor must file a schedule of assets and liabilities; a schedule of current income and expenditures; a schedule of executor contracts and unexpired leases; and a statement of financial affairs, listing his creditors.
  
  

After Filing

• A trustee will be appointed to the debtor’s case, and the trustee will conduct the first meeting of creditors. The debtor’s creditors may attend, but their attendance is not required. The trustee will ask the debtor to swear to the schedules he filed with his petition, detailing his financial situation.
  
  Once the debtor has filed his bankruptcy petition, an automatic stay will go into place. The automatic stay prevents creditors from trying to collect on the debts. This immediately stops debt collection actions such as phone calls and letters to the debtor, lawsuits and wage garnishments, foreclosure of a home and repossession of a vehicle.
  
  

Chapter 7

• In a Chapter 7 bankruptcy case, the trustee gathers the debtor’s property and sells it to raise money to pay the debtor’s creditors. The debtor can keep certain property, but all other property will be used to pay creditors. Once the trustee has paid the creditors, the debtor receives a discharge.
  
  

Chapter 13

• In a Chapter 13 bankruptcy case, the debtor proposes a repayment plan for how he intends on paying his creditors. This plan will span from three to five years, and the bankruptcy judge must approve of this plan. The repayment plan will explain how the debtor will use his income to pay monthly living expenses and how he will use his disposable income to make monthly payments to the trustee. Once the debtor pays the trustee, the trustee takes a certain amount for her services and then distributes the remainder of the payment to the debtor’s creditors.