How Do I File Bankruptcy for Debt Relief?

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A common question fielded by accountants, financial planners, and lawyers includes, unfortunately, the question “how do I file bankruptcy”. While most individuals understand the general idea and practical applications of the bankruptcy process, the knowledge on how to initiate the process is often lacking entirely. This article delves into the specific process of initiating a bankruptcy filing, including the federally mandated requirements needing met in certain cases.

Prior to taking action on any of the information below, any individual or household should seek the advice and insight of a bankruptcy lawyer. Filing for bankruptcy in a favorable manner is not an easy task, nor is it one without long-term future implications. Understanding the bankruptcy process, specifically how current bankruptcy laws apply to your individual debt case, is something only a bankruptcy lawyer can accurately decipher on behalf of clients. In short, the bulk of bankruptcy process should involve pre-planning, including potential avenues available to avoid bankruptcy, or at the very least, how to maximize the benefits of the bankruptcy process.

The following outlines the steps involved in actually filing for bankruptcy, including:

  • As mentioned above, a large amount of pre-planning should preclude any formal petition for bankruptcy with the courts; however, it is not necessarily required under bankruptcy law per se.
  • Petitioner (person seeking bankruptcy relief) must pay to file bankruptcy, unless receiving a waiver from the courts. The costs for filing Chapter 7 itself stand at $299, but these costs do not include costs of legal counsel.
  • Prior to actually filing, debtors must meet certain eligibility requirements. These requirements include eligibility requirements concerning income, debts owed, and other items noted under bankruptcy law. Assuming the financial criteria are met (meeting income requirements to file, meeting debt requirements, etc.) the debtor must still complete counseling with government-approved credit counseling agency.
  • Since the passage of the Federal Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, any debtor seeking bankruptcy relief must provide documentation (certificate provided by agency) stating they have received credit counseling within 180 days prior to actually filing the petition of bankruptcy.
  • Assuming the credit counseling and income based eligibility requirements are met, a debtor must next prepare and complete a packet of files obtained from a local bankruptcy court.
  • At completion of documents, return them to the courts. The courts will then initiate the 341 notices and meeting, alerting your creditors of the proposed bankruptcy filing.
  • Depending on the Chapter of bankruptcy filed, additional documentation may be required at any given point during the bankruptcy process. Additionally, certain documents filed initially may be amended during the filing process as well, assuming adjustments are not based on fraud or other attempts to subvert the bankruptcy process.

Getting Legal Help with Filing for Bankruptcy

While it is possible to obtain the requisite forms needed to file for bankruptcy, including in some jurisdictions being available online, the reality is that the bankruptcy process itself will require more insight and planning than simply filing the required forms with the courts. Having legal counsel before and during the bankruptcy process is instrumental in planning and filing a viable bankruptcy case that ultimately benefits the individual debtor.