This post will primarily deal with Chapter 7 bankruptcy and 13 bankruptcies. Chapter 11 business reorganization bankruptcies are a different animal all to themselves. You will follow the steps below when you file for a personal or as it’s sometimes termed ‘consumer’ bankruptcy for debt relief.
STEP 1 – Assessing Your Case
In order for the attorney to be able to properly assess your case, an initial interview will gather the following information:
- Copies of three years of your most recent tax returns.
- The amount of income tax that you may owe.
- The amount of domestic support obligations in any arrears.
- What is your home worth and the balance owed on recorded mortgages and the amount of monthly installments that you are behind.
- How much are your cars worth and the amount that you owe on them.
- An approximate of balances that you owe on all your bills including credit cards.
- A copy of pay stubs for the last 60 days.
- Your home mortgage documents.
- The certificate of title on any motor vehicles you on.
- In court papers for lawsuits you are involved in.
- Divorce, domestic support orders or marital settlement agreements.
- Documents showing the amount of income from any sources.
STEP 2 – Finding Creditors
Begin finding your creditors. In most cases you know who you owe money to. Remember, you only receive a discharge for those creditors you list in your bankruptcy schedules, notwithstanding the correctness of the amounts owed. You have outstanding invoices and bills which detail the amount of money owed, the account numbers and their contact addresses. In a few instances, you may be unsure of any outstanding balances. You want to be sure that there are not any old or forgotten debts. Again, creditors you do not include on your bankruptcy documents will not be discharged.
Order credit reports from all three of the major credit reporting agencies. Some creditors may have not reported to all the agencies, and some are missed by others.
STEP 3 – Choosing an Experienced Attorney
Interview and decide on an experienced attorney. Now that you have all your information gathered, you can interview attorneys well-armed about your specific circumstances, and you will receive informed answers to your questions.
After deciding on an attorney, ask them for a worksheet of all information they are going to need. This will require you to gather as much information as possible. The answer to all these questions is going to wind up in the bankruptcy filing, so it is important to have accurate and timely information.
STEP 4 – Credit Counseling
Arrange for credit counseling. Ask your attorney for local recommendations. BARF or BAP requires you have a certificate from an approved credit counseling agency within 180 days of your petition filing for chapter 7 bankruptcy.
STEP 5 – The Questionnaire
Many law firms will give you a questionnaire to complete at home, click on the link for an example. Fortunately, you have already taken a big step toward completing this paperwork by gathering the data in Step One. It’s important to complete the questionnaire accurately. Remember this information is going to the bankruptcy court and it will be reviewed and even sometimes audited. Take your time.
Return your paperwork to your attorney and they will make up the official documents and pleadings from the questionnaires you have completed. When they give you the draft, take it home and review it thoroughly and make any corrections before you return it to the attorney.
STEP 6 – Filing the Petition
Once all the documents are complete, you and your attorney assess your situation and will decide on the actual date to file the petition and pleadings with the court. There are several considerations that may come into play as to the filing, or petition date. For example, you may have recently lost your job. You may want to delay the filing so your average income for the last six months would be lower, thereby making it easier to pass the Means test. Your attorney will guide you to this decision.
Once you do file, the section §362(a) automatic stay kicks in. The stay simply means that creditors are forbidden to take any action against you. Collection calls and actions will stop immediately. It usually takes about 7 to 10 days for the courts to notify your creditors. If you receive collection calls, simply tell them you have filed for bankruptcy and they will receive their notice in the mail in a few days.
TO BE CONTINUED: Next Blog Post – Information about the automatic stay provision.