Bankruptcy 101: A Guide To Filing Bankruptcy

Each situation is different, so your legal counsel will need to tell you exactly which documents you need. However, having your personal papers together such as car note information, mortgage or rent documents and credit reports are a great place to begin. Also, making a list of ALL debts is very valuable to get a head start on the process.

Step One in the process is seek professional help. You cannot do this alone! Do not be embarrassed by your situation. Everyone has had hiccups in their financial lives before. It is a fact of the current economy that people are hurting financially and emotionally.

If anyone tells you that bankruptcy is simple and they will file one for you for $200, run away! That person is only in the business to take your money. Do not use firms who advertise on TV. They are paying millions of dollars a year for those ads - where do you think the money comes from pay for them? They usually charge two or three times more than most other lawyers charge for the same services. Get good, one-on-one legal help, do not gamble your financial future. Call several lawyers and compare their prices, their experience and their commitment to professionalism and their clients.

File the bankruptcy paperwork through your attorney. This often consists of 35-100 pages of paperwork! This is the reason why you need expert, honest legal counsel in this process.
If paperwork is filed incorrectly or something is missed, it can cause the whole bankruptcy to be thrown out.

Time from filing to discharge: Typically 4-5 months

STEP ONE: Mandatory Credit Counseling: For cases filed after October 17, 2005, you must obtain a certificate from an approved credit counseling agency before you can file your case. This costs approximately $50 and can usually be done quickly online. Your attorney will provide you with information on how to obtain this counseling. A copy of any payment plan devised by the counseling service must also be filed with the court.

STEP TWO: File Petition, Schedules and Statement of Financial Affairs with the court. These are documents you sign under penalty of perjury. This ceases the creditors ability to actively pursue the debt from you suring this time. This is called an "automatic stay".

STEP THREE: Mandatory Meeting with the Trustee. This is normally called a 341(a)meeting. The Trustee is an independent person appointed automatically in all Chapter 7 cases by the United States Trustee's Office (an administrative branch of the U.S. Department of Justice). The Trustee's role is to liquidate (meaning, turn into cash) any non-exempt assets you have. The Trustee then distributes those funds to your creditors according to their statutory priority in the bankruptcy code. The Trustee also monitors your case and will refer any incidences of fraud to the F.B.I. The Trustee can also object to the granting of discharge in your case if he/she believes your case was not filed in good faith (such as you have too much excess income to file a Chapter 7) or if you have committed fraud in connection with your petition and schedules.

STEP FOUR: This is the time that creditors have to object. This is rarely done, but is a possibility.

STEP FIVE: Financial Management Course: For cases filed after 10/17/05, you are required to complete a financial management course before receiving your discharge. In Chapter 7 cases, you must have completed this course and submitted the certificate of completion to the court no later than 45 days after the date first set for your meeting with the Trustee. If you fail to do this, you will not get a discharge. This course can also be done over the internet or by phone, and costs between $19 and $50.

STEP SIX: Discharge! This will be the day you have been waiting for.

Would you like to find out how to AVOID having to file a bankruptcy? There is a great resource to be found here: How to Avoid Bankruptcy

Would you like information on how to save money and pay off your credit cards? Are collectors calling you everyday? Check out this valuable resource and read the story of how they did and you can too. Credit Card Debt Settlement

Here is another great resource for debt settlement (includes video!): Modern Debt Solutions

Worried about your credit score? Check this out: Credit Repair Secrets