How to File Bankruptcy With Unsecured Debt

Bankruptcy allows many debtors to get rid of credit card debts.

Getting rid of unsecured debts is a major benefit of filing for bankruptcy. Unsecured debt is comprised of debts that are not attached to property. When debtors file for bankruptcy, they usually cannot afford to pay their monthly living expenses and secured loans while still paying off the extensive unsecured debts. Having to pay none or only a portion of the unsecured debts can help many debtors get the fresh start they need.

Collect Bills

Retrieve the most recent bills and payment demand notices from all secured and unsecured creditors. Get a copy of your credit report. Sometimes the credit report will not include all of your debts, such as medical expenses and payday loans. As a result, make sure you collect paperwork received from any creditors not listed in the credit report. Create a list of the creditors and the amounts owed to each if you are unable to find statements for all of your debts.

Credit Counseling

Complete a court-approved credit counseling course. Credit counseling provides a budget analysis and information regarding how to manage debts. Review the list of credit counseling agencies available in the state on the U.S. Department of Justice website. The cost of credit counseling varies with each agency. Take credit counseling over the phone or online within 180 days before filing for bankruptcy.

Bankruptcy Petition

Fill out the bankruptcy petition. A copy of the bankruptcy petition is available to download on the Bankruptcy section of the U.S. Courts website or on the state's bankruptcy website. Type or write the information regarding unsecured creditors in Schedule E and Schedule F of the petition. Put information regarding unsecured creditors with priority claims in Schedule E. Those types of claims could include IRS debt or alimony and child support. List unsecured creditors with nonpriority claims in Schedule F. Those types of claims typically include credit cards, credit accounts with retailers, medical bills and payday loans.

File the Paperwork

File the petition and credit counseling certificate of completion with the bankruptcy court. Pay the court filing fee. As of 2010, the Chapter 7 filing fee is $299 and the Chapter 13 filing fee is $274. Complete the Application and Order to Pay Filing Fee in Installments if you are unable to pay the filing fee in full on the date of filing. Request a Chapter 7 fee waiver, if you qualify, by completing the Application for Waiver of Chapter 7 Filing Fee. Both fee applications are available for download on the U.S. Courts website and on the state's bankruptcy court website.

References

• U.S. Department of Justice: List of Credit Counseling Agencies
• U.S. Courts: Chapter 7 Liquidation Under the Bankruptcy Code
• U.S. Courts: Chapter 13 Individual Debt Adjustment
• U.S. Courts: Bankruptcy Forms