Step-by-Step Instructions for Filing Bankruptcy
Filing for bankruptcy is never fun. In addition to the stress of facing a bad financial situation, filing for bankruptcy involves complicated legal procedures that can be very confusing. Even debtors who choose to file bankruptcy "pro se," or without an attorney, can often benefit from a free consultation with a lawyer. Following correct procedures is paramount in filing a bankruptcy petition, but the process itself is mostly out of your hands after you complete the initial paperwork.
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Instructions
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Choose your form of bankruptcy. For individuals, the two main options are Chapter 7 and Chapter 13. A Chapter 7 bankruptcy discharges most of your unsecured debts in exchange for the sale of assets above certain government-mandated exemption levels. A Chapter 13 bankruptcy protects your property but requires you to make payments to creditors over a 3- to 5-year period.
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Stop using your credit cards. Most credit-card charges or loans taken out within 90 days of filing will not be discharged.
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Stop paying your credit cards. As your debts will ultimately be discharged by your bankruptcy, paying your debts before you file amounts to throwing your money away. Additionally, the court may consider payments made as much as one year before filing to be preferential, in which case the court will take back the money from your creditor.
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Assemble all of your financial information. A bankruptcy petition is a lengthy document that can easily run more than 50 pages. You must provide the court with every last detail of your financial life, so gather all of your recent bank and credit-card statements, pay stubs, loan documents, and tax returns.
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Contact your local bankruptcy clerk. Each district has its own peculiarities and local rules that you must observe to avoid the dismissal of your bankruptcy petition. The clerk will provide you with a copy of local bankruptcy rules and information regarding the correct forms you should use.
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Complete the bankruptcy forms. Even if you are filing without an attorney, you are expected to follow correct legal procedure; if you don't, your case may be thrown out. If you are filing for a Chapter 13 bankruptcy, you will have to devise a payment plan for the bankruptcy court to review.
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Attend a pre-bankruptcy counseling class. Due to the changes in the bankruptcy laws in 2005, you must now attend a financial counseling class within 180 days before you file a bankruptcy petition.
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File your petition. Most districts have a specific bankruptcy intake window to expedite your filing. The clerk will briefly review your petition to ensure all forms are included, then will provide you with information regarding your meeting of creditors.
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Attend your meeting of creditors, also known as a Section 341 meeting. Creditors rarely appear at this meeting, which is designed to give the trustee a chance to examine your financial records and bankruptcy petition. The meeting rarely lasts more than a few minutes.
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Attend a post-meeting financial counseling class. In addition to the pre-bankruptcy class, you must also attend a financial class after your 341 meeting in order to obtain your discharge.
Trustees and creditors have 60 days after your 341 meeting to object. If no objections are lodged, you will receive your discharge shortly thereafter. If you file for Chapter 13 bankruptcy, the court will inform you if it approves your proposed payment plan and tell you when you can being making payments.
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