How to Understand and Declare Bankruptcy

No one wants to declare bankruptcy, but if you are facing that possibility, you will need to know what steps to take.

Difficulty: Moderately Challenging

Instructions

1. Before filing for bankruptcy, you should review the changes to the bankruptcy law.
   
   The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 went into effect in October 2005. The bill amends Title 11 of the U.S. Code and provides for stricter bankruptcy filing requirements. Under the new law, those who have the ability to do so may be required to pay back part of their debt rather than having the debt erased. The law also makes it more difficult for "serial filers" to abuse bankruptcy protection and requires more disclosure to customers by credit card companies.

2. If you have questions about filing for bankruptcy, or are nervous about the process, you should probably consult with a licensed attorney. There are many attorneys who specialize in bankruptcy. Call several and ask for prices. You can also ask for a simple consultation and fill out and/or file the forms yourself to save cost.

3. A bankruptcy case is commenced by the filing of a petition. You must also file a statement of your assets and liabilities, and schedules listing your creditors. If you choose to file a bankruptcy petition without the help of an attorney, you can find the required bankruptcy forms online. You can find forms and a bankruptcy manual here: http://www.uscourts.gov/bkforms/

4. There is a range of filing fees for bankruptcy, depending on the chapter of the bankruptcy code under which you file. For information on the different chapters of the bankruptcy code visit: http://www.uscourts.gov/bankruptcycourts/bankruptcybasics.html