How to file bankruptcy

Assuming you have exhausted every option and found no clear alternative for bankruptcy, we’ll proceed with walking you through the process of how to file bankruptcy by addressing the two most common ways to do this. First by filing with a bankruptcy attorney and then filing bankruptcy alone.

How to file bankruptcy with an attorney

One way to do this and the most common, is by simply contacting a bankruptcy attorney to prepare your bankruptcy petition and file your case. Your attorney will explain the process of bankruptcy and the terms of his/her representation of you. Some consultations are free and some you have to pay for. It really all depends on the firm’s policies, I would suggest you stick to saving as much as possible so try not to pay for a consultation and make appointments only with firms that don’t charge for this. Bankruptcy consultations should really be free.

Your lawyer will determine which bankruptcy chapter is best for you, based on your financial situation and by completing the BAPCPA’s bankruptcy means test, which helps him determine your eligibility. Write down all your doubts, concerns and questions about the process and when you get the answers write them down also. I would also suggest you seek consultations from at least three firms, shop around because not all bankruptcy attorneys charge the same fees. You’re looking for somebody who’s modest in pricing and who’s also honest and a little sympathetic to your case. To some lawyers you’re just another case number, while others will treat you with a little more respect and dignity.

Once you have got all your information from your attorney, take some time to study it all, and read over the notes you made when you asked questions. Discuss everything with your spouse if you’re married, let it soak, do some more online research on your own and read other people’s posts on bankruptcy blogs and forums.

The fees will vary per law office. Some are as high as $2000, while you may find others that only charge $700. It all depends on where you are in the country. Remember also that just because a lawyer charges a high fee, doesn’t mean that they’ll have the best service. You’ll also need to pay the court’s $299 filing fee if you’re filing bankruptcy chapter 7 or $235 if you’re filing bankruptcy chapter 13. These are fees that the court charges to process your case.

Your attorney will most likely give you a list of things he/she expects you to bring back with you when you’re ready to file bankruptcy. Here’s a quick list:

• Income Tax forms for the last two years
• Income information - current employer, two to three weeks of pay stubs
• Debts spreadsheet - a list of all your current debts including utilities and such.
• Valid identification - Driver’s license, social security card etc.
• Your credit report

Once you’ve provided all this information, your attorney will prepare the bankruptcy petition for you. When that is completed you’ll get a call back to sign your paperwork and then that petition gets submitted to the local bankruptcy court. Prior to your paperwork being submitted you must complete the first part of the credit counseling course required by the court. The second part can be taken after your meeting in court and before your discharge. The credit counseling portion of the process are new implementation of the bankruptcy law changes from Oct of 2005.

One your petition is filed, you’ll be sent an appointment letter for you to show up to court for your hearing, about 30 days from the day of your petition and you’ll be notified in writing with plenty of time about this as well.

During your hearing in court, you’ll meet the bankruptcy trustee assigned to your case. The trustee will examine your case and get a good idea for the reality of your situation. The trustee’s role is to make sure that your file is in order and that all expense reports are accurate and you’re not hiding anything, he also needs to find additional assets that can be liquidated so that your creditors can be paid before you can get a bankruptcy discharge.

You’ll be asked questions by the trustee during this meeting, but don’t get nervous and don’t sweat it, he’s only going over your paperwork and making sure everything you submitted is accurate. It’s not a court room scene from “law and order” it’s just a normal proceeding. Answer honestly and don’t bother providing any additional information outside of what’s being asked. Simply answer the question and wait for the next one.

Unless there is more information the trustee wants to see from you, you won’t need to go back to court again. At that point you can assume that your case is good to go and that it will be discharged. For this to occur another 2 to 3 months may go by if you’re filing bankruptcy chapter 7, otherwise if you’re filing chapter 13 your case can last longer since your repayment plan still needs to be submitted by you and approved. Don’t worry about the time it takes just use this time to save all the money you can and work out a plan of action for what you need to do after your discharge.

Filing Bankruptcy Alone

The procedure will be the same, though filing bankruptcy alone is harder and not recommended. When you file alone the court and the trustee will make the assumption that you have the knowledge to handle the proceedings on your own. If there are inaccuracies in your paperwork it will be your responsibility.

The first thing to do for your process is to download the bankruptcy forms from The US Courts website, these forms come with instructions and you must read these carefully since they also have detailed information on how to file bankruptcy for yourself.

Once you’ve filled out your forms, take the time to sign up for the credit counseling course and take the first part immediately, then you need to gather all your required documentation in the list above and head to court to file your case.

The same thing will happen here where you wait for your appointment letter then head back to court to meet with the bankruptcy trustee about your case. You’ll answer questions in the same fashion. Even when accompanied by a attorney, the questions will only be directed to you and your attorney will participate very little during this time, unless something specific is needed.

Often times when filing bankruptcy alone, you’ll end up returning to court because of something that’s missing from your file, and these are usually important pieces that most people will neglect. The instructions are there to guide you but often people forget or overlook certain things that can cost them to have to return to court or sometimes resubmit their bankruptcy petition again.

Another disadvantage of filing bankruptcy alone is that usually individuals think they can outsmart the bankruptcy trustee, and this is often where things go very wrong. People think they can hide assets or liquidate before filing without anybody knowing about it. This is very risky especially if these are paper assets or registered high valued items like a car or real estate property. That’s why hiring an experienced bankruptcy attorney is the best option, you’ll get all these instructions ahead of time an be advised about what to do and what not to do.

Once you get past the court hearing without any problems, then you should expect to get discharged within the next 2 to 3 months, in which case you should complete the second part of the credit counseling and be done with it.

You’ll receive your bankruptcy discharge via mail, when that arrives keep it somewhere safe and make sure you make copies to submit to any creditor that tries to collect afterwards, they may try, so keep your bankruptcy records in order and your discharge papers ready to present in case that happens to you.

Typically for pro-se filers (self filers) it is most adequate to file bankruptcy alone when there are no assets to liquidate and the filer is mostly burdened by unsecured debt like credit cards. In cases like this you would mostly likely file for bankruptcy chapter 7 and even if you don’t know much about how to file bankruptcy, you can, in most cases, handle your own file if you take the time to read the bankruptcy laws that apply to you. If you’re filing chapter 13 or a restructuring of your debts, this process will be awfully complicated and you should consult a bankruptcy attorney to handle your case.

The only other thing to do now is start all over, by monitoring yourself constantly and making the commitment that this will not happen to you again, many times people hear that this is not their fault and they take that to heart making them selves feel as the victims of debt. Unless you suffered unforeseen incidents such as identity theft, divorce or a death in the family, you have to realize that you were driving all along so take account of your previous actions and make sure you make a positive change.

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Are you considering bankruptcy?

Personal bankruptcy cases are on the rise. Hundreds of thousands of Americans declared bankruptcy in 2007 and the rate of filing has not slowed down in 2008. A tough economic state and lack of stable employment and job security are only part of the reason. Personal spending habits have certainly contributed to record levels of credit card debt and the current housing market has left many with high balance loans and depreciating values in many parts of the country.

Filing for personal bankruptcy is a tough decision and whatever the circumstances may be for you, it’s important that you educate yourself as much as you can and carefully assess your own financial situation before you proceed with filing bankruptcy. There are several types of bankruptcy that cover not only individuals but small and large businesses and of course special codes for corporations. Chapter 7 and Chapter 13 are the two types of personal bankruptcy and the most commonly filed, Chapter 11 is similar to chapter 13 though this is what an LLC, partnership or corporation would want to file.

This is a quick explanation of what filing bankruptcy is all about, what it does and the effects it can have on your financial future. Please check out the links above for detailed explanations on bankruptcy chapter 7, chapter 13 and chapter 11.

Please take note that none of content here is meant as legal advice nor is it intended to encourage anyone to file for bankruptcy. This option should be a last resort, there are alternatives to bankruptcy that you should consider before filing.

What is bankruptcy?

Bankruptcy is a legal proceeding in which people, companies or corporate entities who can no longer afford to pay their creditors, can get protection through a court order called “The Order of Relief”. Bankruptcy offers a fresh financial start and these benefits are afforded to all by federal law, therefore all bankruptcy cases are handled in federal courts. Bankruptcy puts into effect the order of relief also known as the automatic stay which stops your creditors from attempting to collect payments from you, that is until your debts are sorted out through court proceedings. The automatic stay is further explained in the Chapter 7 page.

During the process of filing bankruptcy you will need to provide specific documentation such as past tax returns, proof of income, a breakdown of all your debts, all property and assets you own, etc. It is possible to file your bankruptcy case alone but the paperwork is complicated and can be confusing. Hiring a law firm that specializes in personal bankruptcy cases is usually the best thing to do. These services aren’t always cheap though, and if you’re struggling to pay your creditors you may have trouble paying the fees for these services, which often need to be paid up front. So it’s important you prepare in advance and allocate some funds early on when you begin to consider filing bankruptcy.

There are a few chapters in the US bankruptcy code. Chapters 7, 9, 11, 12, 13, and 15. You will get a detailed explanation of chapters 7, chapter 11 and chapter 13 on this site since they are the most common forms for individuals, partnerships and small businesses. It’s easier for a bankruptcy attorney to determine which bankruptcy chapter you qualify to file, however by learning about what each chapter does and how they work you will get a good idea for which one will fit you best. Here’s some of the information you’ll need to provide before you file:

What happens after bankruptcy?

Neither one of these chapters will make it easier on your credit once you get a bankruptcy discharge. The difficulties after bankruptcy obtaining credit, renting a place to live, and qualifying for certain jobs will be the same. Unfortunately the fresh financial start can be hard to embrace when you file bankruptcy since it takes time to rebuild you financial life again. The hardships can continue if you’re not prepared to deal with what comes after. Normally after bankruptcy, most credit providers will not want to deal with you. The ones who will, can impose high interest rates and/or high security deposits because of your recent bankruptcy case.

When you file you will be required to take bankruptcy counseling courses, also known as credit counseling, from an agency approved by the US Trustee . You can find a list of approved agencies at this link: US Trustee Approved Credit Counseling Agencies. The costs are usually moderate, $20 to $30 dollars should be a good range to stick to. You will need to take the first part of this personal bankruptcy training before filing and then the second part before you get discharged.

Consider your case carefully and don’t forget that there are alternatives that depending on your situation may be a better option than filing bankruptcy.

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