Rules for Declaring Bankruptcy

• There are many rules and regulations in declaring bankruptcy.us supreme court image by jedphoto from Fotolia.com
  
  When a person files for bankruptcy protection, it may be a last-ditch attempt to gain relief from a mountain of debt that the debtor has acquired. There are thousands of bankruptcies declared every year across the United States. There are many rules and regulation that must be followed in a bankruptcy case.
  
  

Credit Counseling

• As of 2006, before you can file for bankruptcy protection, you must prove that you have undergone credit counseling within the past six months. Credit counseling seeks to eliminate your debt by reducing the interest rates and amount owed by working with creditors on a payment plan. You must submit a certificate of completion within 15 days of filing for bankruptcy protection.
  
  

Proof of Income

• The Internal Revenue Service must provide income tax returns as proof of your income. Personal declarations have not been accepted since 2006. This eliminates the possibility of people lying to the courts about how much they make if they are required to create a repayment plan. With the 2006 law changes, repayment plans have become much more prevalent since there are more protections for creditors.
  
  

Payment Plan

• If the bankruptcy court rules that you are required to pay back a portion of your debt through a payment plan, you must adhere to that plan if you wish to have your remaining debts eliminated or discharged by the court. The payment plan is administered through the bankruptcy court and the monthly amount you must pay is determined with the approval of the court. The goal is to pay back the remaining debt without causing undue hardship on the person filing the bankruptcy.