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The bankruptcy code is separated into several different chapters for different purposes, and before you file for bankruptcy, you will need to decide which chapter is right for you. Individual debtors will usually only file under Chapter 7 or Chapter 13 of the bankruptcy code.
Chapter 7, often called liquidation, is for individuals who have serious need to discharge their debts, and are willing to give up their property in order to do so. Under chapter 7, individuals release any assets that are not deemed to be exempt to the court, those assets are liquidated and the proceeds are distributed to the debtors creditors. The court will then decide which, if any, of your debts may be discharged, meaning you will no longer be responsible for paying them back.
Chapter 13, or the "wage earner's plan," is designed for individuals who have fallen behind on payments of their debts. This chapter is often used for individuals who are facing foreclosure, because the court will create a manageable plan spread over three to five years to repay debts and get payments back on track. -
The first step in filing for bankruptcy is consulting a reputable bankruptcy lawyer. A bankruptcy lawyer will advise you on specific steps needed to lower your monthly debt payments or get certain debts discharged. Lawyers will also guide you through all the paperwork necessary for filing for bankruptcy and submit your petition for bankruptcy for you.
If you have a background in finance or accounting, you might want to consider a bankruptcy consulting service. Professionals from these services will help you in filling out your bankruptcy petition and advise you on how to complete the rest of the process. Representatives from bankruptcy consulting services may or may not be lawyers and will not provide any help after petitions have been filled out, so only choose this option if you are completely confident in your ability to represent yourself.
If you do not have an attorney to submit your petition for you, you can file your petition with the bankruptcy court responsible for your area either in person or through the mail. After submitting a petition, you will be asked to appear in court for a hearing with representatives of the court and your creditors. During this hearing, court representatives will consider your case and make decisions about whether to liquidate your assets and whether to discharge any of your debts.
