Know the Steps to Filing Bankruptcy Before You Start

If you should find yourself in the situation where you must file bankruptcy or lose everything, it is important to know and understand the steps to filing bankruptcy. In order to start the wheels in motion that will commence the process of bankruptcy and eventually clear up the debts you've accumulated and give you a fresh financial start, consider the following steps:

Find an Attorney

Perhaps the most important step you can take is to find a good bankruptcy attorney. Find someone with whom you feel you can comfortably work and who has experience in bankruptcy.

Determine Type of Bankruptcy

Determine which kind of bankruptcy you need to file for. There are two choices, generally, for individuals filing: Chapter 7 (liquidating assets and discharging debt) and Chapter 13 (a restructuring of debt allowing you to pay off debts in a timely manner). Counsel with your attorney as to which option will work best for your situation.

Complete a Credit Counseling Course

Before you will be allowed to file for bankruptcy, you will have to complete a credit counseling course. This as per the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), and must be completed and approved within six months of filing. Once again ask your attorney for the courses nearby or, if possible, online.

Complete and File All the Paperwork

This will be the most involved and complicated part of the process. There will be forms regarding your income for the last three years, your current monthly expense and all your debts and creditors will have to be listed. You will also have to list all your property; this will include clothing, work implements, home appliances, electronics, etc. You will also have to include information regarding your employment and the amount of money you make. There will be forms to complete regarding you tax returns for the last three years. You will have to include pay stubs and copies of all your expenses, and the lists will go on.  Be sure and copy everything you submit so that should anything get lost along the way, you will not have to duplicate your work.

Pay a Filing Fee

You will be required to pay a filing fee. This needs to be paid at the time you submit your paperwork. Usually this is $175 for Chapter 7 or $160 for Chapter 13. You may also be required to pay all, or perhaps only a percentage, of your attorney fees. These fees may vary but should be available for you to review prior to submitting your paperwork.

Waiting will be difficult, but it will take some time after you have submitted your forms for the court to review, for lawyers and trustees to discuss and clarify items. You may have to submit additional documentation along the way. Ask in advance for an estimate on how long some of this may take, as your lawyer may be busy with other cases. It can last anywhere from two to six weeks sometimes.

Attend Court

In the case of Chapter 13 you will have to submit a repayment plan, or create one with the aid of your lawyer. This will be part of the paperwork you submit when filing Chapter 13.

Before all the numerous forms can be submitted to the court, you will probably have to visit your attorney's office and sign everything.  After it is typed and ready to go, and you sign all the forms, they will be ready to be filed with the court.

At some point near the end, you will have to attend a court date for your case. You will be there with your attorney as well as your creditors and the bankruptcy trustee. You will be asked questions by the trustee and possibly some of the creditors as well. At the end of this meeting, the trustee will decide whether or not to approve the bankruptcy as written or whether to make adjustments to it. Once the case is finalized, it is called the discharge. Generally most Chapter 7 cases are discharged 60 days after the meeting with the trustee.  The only thing that would prevent this is if a creditor takes action against you for some approved reason. In the case of Chapter 13 bankruptcies, they are generally discharged some time up to 60 days following the final payment that is made, which usually take between three and five years.

Seek the Help of a Professional Bankruptcy Attorney

Though these steps will help you know what you will need to do to be successful in your bid for bankruptcy, you are always best served and your rights are always best protected when you enlist the assistance of a professional bankruptcy attorney.