How to File for Bankruptcy: Seek Out an Experienced Bankruptcy Attorney
Although you always have the option to file bankruptcy paperwork with your local bankruptcy court yourself, the fact of the matter is that filing for bankruptcy is an incredibly detailed process. Your case can easily be dismissed if your schedules don't line up correctly and your case can even be delayed if you are missing paperwork or information about your assets is unclear, such as if you are also filing for divorce while owning shared assets.To make the process easier, it's generally a good idea to seek the help of an experienced bankruptcy attorney. An experienced attorney will be able to help you gather the documents necessary to file for bankruptcy and can even help you secure some of your assets with a repayment plan that works for your new financial situation. Even with an experienced bankruptcy attorney, there are several steps to the process, including:
Decide Which Type of Bankruptcy to File
Individuals can file two types of bankruptcy: a Chapter 7 or a Chapter 13. Choosing the right type to file is essential to restoring your financial health. For example, Chapter 7 bankruptcy will generally wipe out all of your debts, with the exception of student debt and some assets that you want to keep. Chapter 7 also stays on your record longer, although some people find this a fair trade-off for the clean slate after filing, particularly if you have a large about of consumer debt.Chapter 13, on the other hand, is a type of bankruptcy that allows you to keep some assets, such as your home, and develops a repayment plan that will allow you to keep certain property. In general, filing for Chapter 13 is ideal for people with large amounts of unsecured debt who do not pass the Means Test that qualifies them for Chapter 7 bankruptcy. Your attorney will help you determine which type of bankruptcy is ideal for your situation.
When you work with a bankruptcy attorney, you will need to have all relevant documentation available to make it easier for your legal team to sort out your paperwork. You will need to have your personal identification information, your bank statements from at least the last 6 months, statements from each of your creditors with your most recent amounts owed, and any letters sent by collectors.The addresses and monetary information on all of these documents will be used to fill out your schedules. If you aren't sure who you owe and how much, a recent copy of your credit report history from any of the three bureaus will have all your relevant debt information.
Before you can file for bankruptcy, even with a lawyer working with you, you will need to take a credit counseling course. This course will take about an hour to complete and can cost up to $30. You must have a receipt of this course dated at least 180 days before your bankruptcy forms are filed with the court.After your bankruptcy documents are received by the court, you will need to take another bankruptcy course. Just like the first course, you will need to have a receipt of your course that will be filed with the court before your 341 Meeting so your bankruptcy can be discharged without delay.
Filing Forms and Sending Documents to Trustee
Your legal team will file your bankruptcy forms with your local bankruptcy court clerk on your behalf. The only documents filed with the court are the official forms and schedules. Other supporting documents, such as bank statements or contracts for the property you intend to keep, will be sent to a trustee who will oversee these documents for the court.
The 341 Meeting is a short meeting you will attend with your lawyer where your bankruptcy case will be reviewed. During this meeting, the judge will look over your documents sent by the trustee to verify that all information is correct. This meeting is also an opportunity for any of your creditors to ask about your financial situation. Most of the time, creditors are not present at this meeting and your meeting can be finished in as little as ten minutes.
What Debts Can Bankruptcy Not Help With?
Filing for bankruptcy is generally most appropriate for people who have large amounts of unsecured debt, including personal loans, credit card debt, and other debt. This process will wipe out some or all of this debt to give you a clean slate to rebuild your credit and put you in better financial health. However, bankruptcy doesn't help with all types of financial obligations, including:
Many people are dismayed to learn that student loan debt is not discharged automatically after bankruptcy. Instead, if you want to discharge student debt through bankruptcy, your lawyer will need to write a motion to the court to petition for this discharge; in general, this is very hard to do. Even if your bankruptcy is successful, you will still need to pay back your student loans or apply for different discharge programs through the federal government.
Child and Spousal Support
Certain financial obligations, such as child support and alimony, are exempt from bankruptcy filings. Although you will have to account for these payments in your financial schedules, these payments do not qualify as unsecured debt.In other words, your obligation to pay child support and spousal support are not "debts" that the court can discharge. You will still need to make payments after your bankruptcy is discharged, although your new financial situation may allow you to petition the court for lower payments.
Owing taxes to the IRS may be a type of debt, but it's not a type of debt that qualifies for bankruptcy. This is particularly true of very recent tax debts that have not been repaid. Even if every other debt you declare in your bankruptcy paperwork is successfully discharged, you will still need to make your tax payments each month to the IRS until your debt is cleared.Filing for bankruptcy is first and foremost a financial decision. Although this is a serious commitment, declaring bankruptcy will not ruin your financial future - in fact, this action can help you have a brighter tomorrow free of debt. For more information about how to file for bankruptcy, contact Stockton & Stern, LLC in Gardner, KS today.