Because many rules govern the requirements for filing different kinds of bankruptcy, it is best to begin by getting professional advice. When you consult with a bankruptcy attorney, you will learn whether bankruptcy is the right alternative for you. If it is, a bankruptcy attorney can help you decide what kind of bankruptcy you should file and can make sure that all the procedures are followed correctly. You should make a list of all your debts and assets before you meet with your bankruptcy attorney so that you can accurately answer the attorney’s questions about your financial situation.
Make Decisions About Your Bankruptcy
You need to make several decisions before you file bankruptcy. You might be eligible for only one form of bankruptcy or you may be able to choose between two alternatives. If you are married, you need to decide whether only one spouse should file or whether you should file a joint petition. You need to decide how you can best protect your assets while getting rid of as much debt as the law allows. You need to determine the most advantageous time to file your bankruptcy while taking care of things you might want to do before filing a bankruptcy (like renegotiating the terms of your mortgage loan) that become more difficult to accomplish after you file.
Attend Credit Counseling
With the six months prior to the date on which you file bankruptcy, you must attend credit counseling provided by an approved credit counseling agency. Consult with your bankruptcy attorney so you can avoid credit counseling services that will try to sell you services you don’t need.
Preparing the Bankruptcy Petition
You will work with your attorney to prepare a bankruptcy petition to file with the court. The petition consists of many separate forms. Some are applicable to a chapter 7 petition, some only apply to a chapter 13 petition, and some are the same in both petitions.
In the petition, you will list all of your sources of income and all of your debts (including those that are disputed) as well as the names and addresses of your creditors and any collection agencies or attorneys that have contacted you on their behalf. You will also list all of your assets and their approximate value. You may need to do some research to find an appropriate replacement value (such as the bluebook value for a used car) for each of your assets. If you claim an asset is exempt from inclusion in the bankruptcy estate, you must specify the exemption in the petition.
In a chapter 13 petition, you will provide the court with a monthly budget that itemizes your necessary expenses. You will then propose a plan to repay your secured creditors in full while paying as much as you can afford to unsecured creditors. Your proposed monthly plan payment is generally the difference between your monthly income and your monthly expenses.
File the Petition
The completed petition is filed with the Clerk of the Bankruptcy Court. As soon as the petition is accepted for filing, an automatic stay goes into effect. The stay prevents your creditors from making further efforts to collect their debts from you unless they can persuade the court to lift the stay.
You will need to pay a filing fee when you file your petition. In a chapter 7 bankruptcy, the current filing fee is $306. You may be able to pay it in installments. In a chapter 13 bankruptcy, the current filing fee is $281.