How to File for Personal Bankruptcy
Filing bankruptcy is sometimes necessary when a person is unable to pay his bills as agreed. It offers legal protection to the debtor for unpaid bills. When a bankruptcy case is pending, a creditor cannot sue, repossess property or garnish wages to collect a debt. Once the bankruptcy process is over, the debtor no longer legally owes the bills that were included in this federal court proceeding. Some people choose to hire an attorney to handle their cases, while others decide to file bankruptcy on their own.
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Instructions
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Get a copy of your credit reports from the agencies Equifax, Experian and TransUnion. You can get free reports once a year (see Resources below).
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Make a list of all debts you owe, using your credit reports at first. You will also need to write down on your list debts that may not be on your credit files, such as rent, day care costs, medical bills, child support, utility bills and other assorted financial obligations.
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Write a list that discloses all the assets you hold, including interest in a home or land, banking accounts, stocks, electronics and other personal property, jewelry and vehicles. In Chapter 7 bankruptcy, which legally excuses you from virtually all debts, you will be required to give up your assets for the court to sell. These help make up for the losses of your creditors. If you choose Chapter 13, which is a formal debt repayment and restructuring plan supervised by the court, you will likely get to keep assets such as a house. Most personal goods are exempt from seizure, even in Chapter 7 cases.
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Obtain copies of your last three income tax returns, recent pay stubs and checking and savings account statements. You may need to ask the appropriate employer or agency to copy these required documents for you if you no longer have them available. In cases of banks and the Internal Revenue Service, you will likely have to pay a small fee to get these copies.
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Decide whether you want to declare Chapter 7 bankruptcy, which stays on your credit report for 10 years, or pursue a repayment plan under Chapter 13. Chapter 13 cases stay on your credit file for 7 years. Student loans, child support, most back taxes and court fines will not be excused through either bankruptcy proceeding.
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Visit the U.S. Bankruptcy Courts website (see Resources below) to download and print forms and instructions for declaring bankruptcy, unless you have decided to hire an attorney to do this work for you.
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Fill out the bankruptcy forms, using the assets and debts information you have already collected.
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Attend a credit counseling session approved by the US Bankruptcy Court (see Resources below). Obtain a copy of your certificate of course completion before filing your bankruptcy papers.
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Take your bankruptcy document packet, including signed forms, back tax returns, pay stubs, banking statements and credit counseling completion certificate, to the local branch of the US Bankruptcy Court. Pay the required fees to start your bankruptcy case, which is usually about $275. If you have a critical financial need, the court may allow you to pay these required fees on a short-term installment plan.
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Attend your meeting of creditors, also known as a 341 meeting. You will receive notice of your hearing date in the mail and will usually have this proceeding within 2 months of your bankruptcy filing. This is an opportunity for anyone with objections to your case to appear in court. However, it is rare for lenders to arise any objections to a bankruptcy case.
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Attend any other hearings for which you receive notice. In most cases, you will only have to go to court one more time to finish your bankruptcy case.
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Tips & Warnings
Remember that it can take as long as 8 months to fully complete a Chapter 7 bankruptcy, and 2 to 5 years to finish a Chapter 13 debt payment plan.
Do not give assets away to relatives or friends or charge items right before declaring bankruptcy, as this can be considered a federal crime of bankruptcy fraud. Bankruptcy fraud can lead to fines and/or federal imprisonment.
