Declaring Bankruptcy

• The person filing for bankruptcy is known as the bankrupt. The bankrupt meets with a bankruptcy trustee and signs the necessary documents. The trustee will notify the creditors of the bankruptcy within a week. The bankrupt submits pay stubs and an income statement to the trustee every month. Two financial counseling sessions must be attended during the bankruptcy. The duration of most bankruptcies ranges from nine months to three years.
  
  

Trustee

• The trustee administers and manages the bankruptcy plan. The trustee negotiates a payment plan or settlement with the creditors. The bankrupt is required to keep the trustee updated regarding the status of his or her finances. Every month the bankrupt must submit a payment to the trustee. The bankrupt's income and the payment plan will determine the amount of money submitted to the trustee each month. The trustee distributes the money to the various creditors.
  
  

Stay of Proceedings

• Creditors are prohibited from communicating with the bankrupt as soon as the bankruptcy case is filed. Any pending lawsuits against the bankrupt cannot proceed. Wage garnishments or other methods being used to collect money from the bankrupt have to stop. Depending on the amount of assets the bankrupt possesses, the notice of bankruptcy filing will either by mailed directly to the creditors or the notice will be published in the newspaper.
  
  

Cost of Bankruptcy

• The bankrupt will be notified of the various costs associated with filing for bankruptcy during the consultation with the trustee. Fees included in the bankruptcy are court filing fees, trustee fees and other administrative costs. The bankrupt will also have to pay a certain amount of money to the creditors based on the payment plan set up. The overall costs of completing the bankruptcy will vary for each person.
  
  

Debts

• If the bankrupt wants to keep property that has a security lien attached, she must remain current with those payments during the bankruptcy. Once the bankruptcy plan is discharged, the bankrupt is pardoned from paying off the remaining debts, excluding obligatory fines or damages issued by a court, compensation owed for stolen items and alimony or maintenance payments. Student loans do not have to be paid back if the bankrupt finished school at least seven years ago.