How to File Bankruptcy in Federal Bankruptcy Courts

Most people who are deciding to file for bankruptcy or thinking about it, are faced with more debt than they can handle. For some, bankruptcy is the only way to get their lives and economics back on track. Bankruptcy is a legal process than can affect your credit for quite a few years, so for many this is a last resort. Outlined below are some facts about bankruptcy and how to file.

Instructions

1. Understand that there are several types of bankruptcy options than can be filed. The three types are Chapter 7, Chapter 11 and Chapter 13. Chapter 7 is a type of bankruptcy used by both businesses and individuals. In these cases, the individual or business generally has little or no monies left after paying their monthly expenses. The expenses considered are housing costs, utilities, food, car payments, among others. In most states there is a limit to what is considered normal expenses and how much money is leftover.

   Chapter 13 bankruptcy requires you to pay back a certain amount of your unsecured debts over a period of time. This type of bankruptcy is filed when there is too much money left over each month to qualify for Chapter 7. The person filing must be employed and will make agreed payments to the bankruptcy court that will be disbursed to his creditors.

   Chapter 11 bankruptcy is usually reserved for corporations. During this process, the company's finances are reorganized and assets are sold to repay debts owed to creditors. Usually, a corporation is allowed to remain functioning throughout the bankruptcy process.

2. Keep in mind that filing for bankruptcy is sometimes a long process. It is possible to file on your own without the help of a professional, but it is not advised. If you decide to file on your own, it is best to educate yourself to what type of bankruptcy you need to file. Education is the key. Go to local libraries, search online or talk to people educated in the laws of bankruptcy, before deciding to file on your own. Be prepared for many frustrations if choosing to go this route. Choosing an attorney who specializes in bankruptcy is probably the smartest, and safest choice. He will be able to help you through this complicated and frustrating procedure. An attorney will need all your personal information, such as monthly expenses and bank account information. Once this is put in order, he will be able to file a voluntary petition with the courts and a trustee will be appointed.

3. Know that trustees are appointed by the court to oversee your case. They are government employees who are usually lawyers, accountants or both. The trustees are not there to be your friends. Their job is to look out for your creditors and making sure that their best interests are met. Attending creditor meetings, checking your list of assets and determining what is exempt, overseeing the selling of assets and reviewing and receiving monies for your repayment plan, are all jobs of the trustees. Remember, trustees are not on your side and make very little money for the job they do. Most trustees working on non-asset cases, make around $60 for their work.

4. Attending a 341 creditor meeting will be the next step when it is time to formally file. This meeting is usually held 20 to 40 days after bankruptcy has been filed. During this meeting the person filing, his attorney and a bankruptcy trustee will be in attendance, with all the information from the creditors. Usually the creditors are not physically in attendance. During this meeting both sides will make sure all the facts concerning the case are correct so there are no surprises when the final court date arrives.

5. Understand that having all the necessary documents is imperative since the new bankruptcy law was enacted in April 2005. Now the courts require a more thorough check into a person's financial information, thus the need to supply more documents for proof. Some of the documents required are driver's license, passport, social security card, six months of pay-stubs, three months of bank statements, titles to all assets, three years of tax statements, pre-bankruptcy credit counseling certificate, credit reports, three months of bill statements, mortgage or lease documents, canceled checks as well as many more. Gathering all the documentation needed to file,can be frustrating in itself.

6. Know that filing for bankruptcy is not free and can be quite expensive, especially if you have no money to begin with. There are several costs involved before you can even begin to file. If you have decided to obtain an attorney, you will find these costs can vary from attorney to attorney. The costs will depend on who you choose and what type of bankruptcy you are filing. Some attorneys may require you to pay the fee in full at the start, while some may charge by the hour and allow you to make payments. If hiring any attorney, you should estimate the costs to be on average no less than $1500. Getting copies of the documentation that is needed, may also cost you. You can usually get free credit reports if you haven't already received one from the credit company within one year's time. Retrieving past bank documents and tax documents, may cost you money to get them copied. If you need to hire an accountant, this will also cost additional money. Attending some type of credit counseling is mandatory. You will have to show proof to the court that you fulfilled this obligation. Generally, there are fees involved for this counseling to set up a budget and receive the necessary certificate you'll need for the court.

7. Know that fulfilling all the above obligations will finally finish the bankruptcy proceedings. Once the court is satisfied that you have produced all the necessary documents, satisfied their requirements as well as the creditors, the bankruptcy will be filed. Bankruptcy will stay on your credit report for 10 years, but you can start rebuilding you credit right away by becoming more responsible with your new debts.

Tips & Warnings

• It is best to seek professional advice when deciding to file for bankruptcy.

• Check the credentials of credit counseling services before choosing one. Some are scams out to get your money.