How to Get Help with Debt by Filing for Bankruptcy

Filing for bankruptcy is a complicated process requiring expert legal advice.

If you find yourself drowning in debt, with a growing pile of credit card bills, filing for bankruptcy may seem like your only option for financial relief. Filing for bankruptcy could be the best solution, but before you file, consider your options to ensure that you're making the best choice for your situation.

Things You'll Need

• Tax returns for past three years
• Driver's license
• Social Security card
• Pay stubs
• Tax returns
• Credit reports
• Insurance declarations pages
• Completed bankruptcy intake questionnaire
• Pre-bankruptcy credit counseling certificate
• Vehicle valuation statement

Instructions

1. Understand what it means to "declare bankruptcy.” When you file for bankruptcy some of your debts are forgiven, but that doesn't mean you no longer have any financial obligations. You're still responsible for paying such expenses as alimony, child support and student loans.

2. Find out if you qualify to file for bankruptcy. Eligibility is based on your personal financial situation. For example, if you still have a steady income and can manage a small payment (around $100) each month on lowering your debt without causing hardships for you and your family, you won't likely be deemed eligible.

3. Get legal help. Filing for bankruptcy is a complicated process; therefore, call your local legal-aid society to see if you qualify for free legal representation.

4. Choose the type of bankruptcy filing that is best for your debt situation. With Chapter 7 bankruptcy, you wipe out most of your debt, but you’re no longer able to spend money on nonessentials, such as a high-end cable TV package. Chapter 13 allows you to pay off your debts in a three- to five-year plan. Chapter 11 is generally reserved for companies filing for bankruptcy or individuals with diverse holdings and properties.

5. File for bankruptcy. You must file a claim at your local bankruptcy court and undergo an in-take process. Provide the court with your Social Security card and driver's license as proof of identification, as well as financial documents that include pay stubs, tax returns from the past three years and all credit reports.

6. Get credit counseling. Once qualified to file bankruptcy, you must get counseling within six months before filing. Call your local bankruptcy court or log on to uscourts.gov for a list of court-approved credit counseling organizations.

7. Meet your creditors in court on an assigned date. Be prepared to answer questions about your financial status, including and how you got into debt.

8. Take your state’s mandated financial management classes after you file for bankruptcy.

Tips & Warnings

• Pre-bankruptcy documents also include insurance declarations pages, a completed bankruptcy intake questionnaire and a pre-bankruptcy credit counseling certificate. If you own a car, a vehicle valuation statement is required.

• Avoid needless spending in the final weeks before filing for bankruptcy. The court views this action as fraud and penalizes filers for it.

References

• UScourts.gov: Bankruptcy Basics
• UScourts.gov: Process

Resources

• Bankruptcy Law Network; Documents Needed to Get Your Bankruptcy Case Started – A Growing List; Atty. Jonathan Ginsberg