When a person or corporation is unable to pay back their debts or obligations, bankruptcy is a legal process that is started. For those who are struggling to make ends meet, it offers a new beginning. A petition is filed either on behalf of creditors, which is less frequent or by the debtor, which is how the bankruptcy process gets started. An inventory and appraisal of all of the debtor’s assets are performed, and those assets may be sold to cover some or all of the debt. You don’t know how to file for bankruptcy without a lawyer? This article serves as a guide to doing so. It also explains chapter 7 and chapter 13 of how to file for bankruptcy. Read along!
How to File for Bankruptcy
You can inform a judge in bankruptcy court that you are unable to pay your debts. To determine if you can repay your creditors, the court looks at your income, your debts, and your assets (aka the people you owe money to). In accordance with your circumstances, the court may decide to discharge (erase) your debts or may establish a plan for you to repay some or all of the money.
Although declaring bankruptcy may prevent the repo man from taking your car, creditors from deducting money from your paycheck, or even the bank from foreclosing on your home, it won’t solve all of your problems. First of all, declaring bankruptcy does not automatically result in the cancellation of your debts. Here is how to file for bankruptcy:
#1. Compile and Arrange Your Paperwork
Discovering your financial situation is the first thing you must accomplish. If there was ever a moment to get organized, it is now because your financial position will take center stage during the whole bankruptcy procedure. In order to support your case, you’ll need to acquire the following documents:
- Tax returns for the past 2 years
- Pay stubs or other proof of your income for the last 6 months
- Recent bank account statements
- Recent retirement account or brokerage account statements
- Valuations or appraisals of any real estate you own
- Copies of vehicle registration
- Any other documents relating to your assets, debts, or income.
#2. Attend a Course on Credit Counseling
Every individual who declares bankruptcy is required to complete a credit counseling course that has been recognized by the Department of Justice. In this course, you will discuss your finances with a representative from a credit counseling service in order to determine whether filing for bankruptcy is indeed the best option. You want to make sure you’re choosing the best course of action for you and your family since, as we previously mentioned, there may be other options that may help you recover from your financial difficulties more quickly than filing for bankruptcy.
You can enroll in the credit counseling course online or over the phone, and it typically takes an hour to complete. The price of the course varies depending on where you enroll, but if your income is insufficient to cover it, you may be able to negotiate a reduced or free tuition. 1 Save your certificate of completion when you complete the course; you’ll need it when you file.
#3. Fill Out the Bankruptcy Paperwork
There are around 70 pages of bankruptcy forms, made up of at least 23 different forms. You are questioned on everything you earn, spend, possess, and owe on the bankruptcy paperwork. A few bankruptcy fundamentals will also be included, such as the sort of bankruptcy you’re filing under and whether a bankruptcy attorney is assisting you.
A lawyer you engage will fill out the paperwork on your behalf using the data you provide to their office.
#4. Ensure That You Have the Filing Fee
Bankruptcy is not inexpensive. You must pay a fee only to petition for bankruptcy on top of the attorney fees. Chapter 7 bankruptcy filing costs $335, while Chapter 13 filing costs $310. 2,3 This payment must be made in person to the court and must be made in exact change. You can request a payment plan to spread out your filing fee if you are short on funds (up to four payments over 120 days). You can also submit a form asking for the cost to be waived if the money is truly tight.
#5. Print the Bankruptcy Documents
Remember that the court is pickier than an English professor at a college when you print out your bankruptcy documents. Important rule: Your forms must be single-sided in order to be accepted by the court (and that would mean more work for you and a lot of wasted paper).
The petition, which is part of the bankruptcy paperwork that establishes your inability to pay back your debts, is typically only required in a single copy by the court. However, some courts require up to four copies. So, to confirm the precise number to print out, you need to contact your local bankruptcy court. You should also make a copy for your own records, of course. Once your paperwork has been produced, sign them so that you’re prepared for the following stage.
#6. To File Your Bankruptcy Forms, Visit the Court
The moment you go through the doors of your local courthouse, security personnel will welcome you and ask you to go through a metal detector. After clearing security, proceed to the clerk’s office and inform the clerk that you wish to file for bankruptcy there. Together with your filing fee, they will collect your bankruptcy paperwork (or application for a waiver or to pay the fee in installments). Do not provide the court with your tax returns or bank statements. After the case is filed, the trustee receives these documents. For additional information on that, see Step 7 below.
While you wait, the clerk processes your case by scanning your paperwork and uploading them to the court’s online filing system. Normally, this takes no longer than 15 minutes.
#7. Submit Paperwork to the Trustee in Your Bankruptcy
After filing, you need to find out who your bankruptcy trustee is. An individual chosen by the court to oversee your case is a bankruptcy trustee. They’re not always lawyers, but sometimes they are. You will be required to provide your trustee-specific paperwork, such as tax returns, pay stubs, and bank statements. In order to have your debts forgiven, be sure to read your letters carefully and follow the trustee’s instructions to the letter.
#8. Visit Your Trustee (In a Meeting of the Creditors)
You’ll meet with your bankruptcy trustee during the meeting of creditors, commonly known as the 341 meetings because it refers to Section 341 of the bankruptcy code, to make sure you didn’t forget to include any crucial information in your paperwork, such as unmentioned debts or assets. The trustee’s responsibility is to ensure that your case is handled correctly and that your creditors receive the most money feasible. You are still sworn to secrecy despite the fact that this meeting doesn’t take place in a courtroom. Hence, be truthful and inform the trustee of any adjustments you need to make to your bankruptcy file. The last thing you want to appear to be doing is concealing something.
The good news is that it may only take a few minutes and be very straightforward. The meeting of creditors may be the only time you actually have to speak with someone about your case if you file for Chapter 7 bankruptcy because you most likely won’t have to appear in court at all.
#9. Finish the Debtor Education Program
Another bankruptcy course, called the debtor education course, must be finished while your case is being processed. You don’t want to experience bankruptcy even once, much less several times. The debtor education course aims to teach you how to go forward with more informed financial decisions. The debtor education course costs the same as the credit counseling course, but it typically lasts at least two hours. Keep in mind that if you want your debts forgiven, you must finish this course.
#10. Complete Your Bankruptcy Filing
You’re nearly finished! But, there are still a few steps that must be taken, and they vary depending on the form of bankruptcy you filed before your case is resolved. When your trustee sells your nonexempt assets—those are the ones that were authorized to be sold when you filed for Chapter 7 bankruptcy—and settles your obligations with your creditors, your debts will be paid in full. Before your debts may be discharged if you filed a Chapter 13 bankruptcy, you must finish the payment plan and guarantee that all of your creditors receive their money. Your case can be dismissed, leaving you starting over if you fall behind on payments or don’t follow the plan.
How to File Bankruptcy without a Lawyer
The following are ways how to file bankruptcy without a lawyer;
- Consider your debt. Do you need to file for bankruptcy?
- Take a course on avoiding bankruptcy.
- Pick the bankruptcy filing option that is most suitable for you. It could be challenging to complete this on your own. If you choose poorly and subsequently decide to switch from Chapter 13 bankruptcy to Chapter 7 bankruptcy, it could be because you didn’t completely comprehend the distinctions.
- Establish the exemptions for your property. Having assistance with this is also really helpful. Giving up a resource when you don’t have to is the last thing you want to do.
- Pay off or reassure your debts. This can include submitting numerous motions to the court.
- Complete and submit the forms. These must be correctly completed notwithstanding their potential for confusion.
- Pay the filing fee or apply for a fee exemption.
- Verify your eligibility. You must complete a means exam for Chapters 7 and 13. If you complete these forms independently and make mistakes, you risk being disqualified from filing. Attorneys are knowledgeable about the requirements and can aid in your eligibility.
- Get a trustee for bankruptcy. You deliver your forms to this person. The trustee is merely an administrator and is not your advocate.
- Attend both a confirmation hearing and a meeting of creditors. You must present your case to the court and your creditors on your own if you don’t have a lawyer.
- finish the debtor education program.
- Get your release.
How to File Bankruptcy Chapter 7
The most common kind of bankruptcy is Chapter 7, which permits you to discharge all of your unsecured debts. If you own any nonexempt assets, such as family heirlooms (highly valued collections, such as coin or stamp collections), second houses, or investments such as stocks or bonds, you must sell the property to pay off some or all of their unsecured debts.
You essentially liquidate your assets to pay off debt when you file for Chapter 7 bankruptcy. Those with no valuable assets and only exempt property (such as necessities of life, trade tools, and vehicles up to a specific value) may be discharged from all of their unsecured debt. Here is how to file for bankruptcy Chapter 7:
#1. Analyze Your Debt
Chapter 7 does not eliminate all debts. You can “discharge” or get rid of various debts under Chapter 7 bankruptcy, including the following:
- credit card balances
- medical bills
- electric, gas, cable, and phone bills
- personal and payday loans
- apartment and car leases, and
- gym memberships and other dues.
#2. Determine Your Exemptions
What you can safeguard if you file for Chapter 7 bankruptcy is specified by exemption laws. The following is something most individuals can hold onto:
- household furniture and appliances
- bedding and kitchenware
- clothing and prescribed medical devices
- some tools needed for your business
- ERISA-qualified retirement accounts, and
- some equity in a car and home.
#3. Make Sure You’re Eligible
You must take and pass the Chapter 7 means test unless the majority of your debt is from a business enterprise or you are a qualified member of the military. Here’s what you’ll do:
- multiply your gross income from the six months prior to filing by two.
- The data can be found on the website of the U.S. Trustee Program; compare it to the average gross income in your state for a family of your size.
You will be eligible if your gross income is that much or less. You will have another opportunity to deduct allowable expenses from your income if you don’t pass. The person won’t be qualified and will need to look to Chapter 13 for debt relief if there is enough left over to pay a sizable sum to your creditors. You’ll be eligible for Chapter 7 if no assets are left for creditors.
Before filing or, in extremely rare circumstances, shortly after, people who are filing for Chapter 7 bankruptcy must finish a course. The course can be taken over the phone or online up to 180 days before you file for bankruptcy.
#4. Fill Out and File the Chapter 7 Bankruptcy Forms
On Chapter 7 bankruptcy paperwork, you’ll provide the court with information on your assets, liabilities, income, expenses, and more. By the time you’re done, you’ll have revealed all relevant information regarding your current and previous financial situation, including whether you wish to keep your car, home, and other secured property or give it back to the lender. Also, you must reveal real estate transactions that happened up to ten years before your lawsuit.
Once the full bankruptcy documents are filed, your case will begin (the “petition”). You can use the emergency filing process if you’re pressed for time because it involves fewer forms because a bankruptcy file can be as long as 60 pages. The bankruptcy court will dismiss your case if the final forms aren’t submitted within 14 days.
#5. Submit Documents to the Chapter 7 Bankruptcy Trustee
By supplying financial records to the Chapter 7 trustee assigned to your case, you will demonstrate the veracity of the material in your bankruptcy petition. Read about the financial records required for proof of bankruptcy to learn why the trustee will require bank statements, pay stubs, profit and loss statements, tax returns, and more.
#6. Meet with the Chapter 7 Bankruptcy Trustee
The trustee will verify identification and inquire about your financial affairs at the 341 meeting of creditors in Chapter 7 bankruptcy (although your attorney may do so if it’s a virtual meeting). Although they are permitted to attend, creditors rarely do. The virtual meetings necessary for social distance, however, are less expensive to attend than in-person meetings, thus creditor attendance has increased.
#8. File Needed Objections and Motions
You will address these issues before your bankruptcy case is finished if you wish to challenge a creditor’s claim against your case or want to get liens removed in Chapter 7. Most of the time, motions are not required, and if you neglect to deal with a lien, the court will probably allow you to reopen your bankruptcy case in the future.
#9. Complete a Debtor Education Course
You must complete the second “debtor education” course before receiving an order for a discharge that will erase your debt. The court will dismiss your case without awarding a discharge if you fail to present your certificate by the deadline. Because you’ll probably need to file a motion and shell out yet another bankruptcy filing fee, fixing this issue might get pricey.
How to File Bankruptcy Chapter 13
Thinking of how to file bankruptcy chapter 13? Here is how to file bankruptcy chapter 13:
#1. Verify That Chapter 13 Is the Best Option
Most people opt for either Chapter 7 or Chapter 13 bankruptcy. Both offer special qualities that aid filers in resolving specific issues. For instance, you can make up missed mortgage or auto loan payments in a Chapter 13 bankruptcy, preventing the foreclosure or repossession of your home or vehicle. There is no equivalent choice for Chapter 7 bankruptcy. Find out when Chapter 13 bankruptcy is preferable to Chapter 7 bankruptcy for additional information.
#2. Assess Your Debt
You may not be qualified if your debt load is too high. There are restrictions on how much debt you can have under Chapter 13. In addition, some debts, like recent tax debt, mortgage arrears, and domestic support obligations, must be fully paid off throughout the three to five-year repayment period. You might be unable to put out a workable plan if you are unable to generate the necessary income. Check to see if you qualify for Chapter 13 bankruptcy.
#3. Give Your Home a Value
Knowing how much property you own and how much of it can be protected by bankruptcy exemptions will be necessary before you file. All of your possessions are yours to retain, but you must pay some creditors a sum equal to the value of your nonexempt possessions. The value of the nonexempt property will be taken into account when calculating your Chapter 13 bankruptcy plan payment.
#4. Determine Your Revenue
Your income must be sufficient to pay for your monthly living expenses, the obligations that the plan must settle, as well as the cost of any nonexempt property that you choose to preserve. If you don’t have enough money, the court won’t allow you to continue. Study up on your bankruptcy plan duties in Chapter 13.
#5. Complete the Bankruptcy Paperwork
If filing for bankruptcy is the best option for you, the next step is to fill out the appropriate paperwork and create a repayment strategy. Find out more about filling out bankruptcy forms.
#6. Complete the Mandatory Pre-filing Course
A credit counseling course must be completed by those who plan to file for bankruptcy before the case may be started. After finished, you’ll get a certificate that you should include in your bankruptcy petition. Learn more about the debtor education and credit counseling requirements for bankruptcy.
#7. Submit Your Paperwork and Make a Payment
Once everything has been verified and is prepared, you should file your forms, and certificate, and plan with the bankruptcy court to start the procedure. You must also pay the filing fee for bankruptcy.
#8. Provide the Trustee Proof of Your Income and Other Assets in the Form of Documentation
The trustee will compare the information you submit in your formal documents to tax returns, bank statements, pay stubs, and other documents you’ll present after you file. The portion of the bankruptcy code that contains the necessity for financial papers is known as 521 and is where these items get their name.
#9. Show Up to Two Hearings
After filing, you’ll attend the “341 meeting of creditors,” where you’ll meet with the Chapter 13 bankruptcy trustee chosen to handle your case. A 341 meeting of creditors must be attended by every filer. Your identification, official documents, repayment schedule, and supporting 521 documentation will all be examined by the trustee during the meeting. Although they are permitted to come and ask questions, creditors rarely do.
Immediately following this meeting, you or your legal representative will be required to attend a confirmation hearing when the bankruptcy court will choose whether to “confirm” or approve your plan. Prior to that, a creditor has the option to oppose by submitting a judicial opposition. The judge will determine whether to confirm the proposal after reading any written objections and taking into account any justifications made during the hearing. Find out more information about hearings and other bankruptcy processes.
#10. Pay Your Payments
Within 30 days of receiving your repayment plan, you must begin making payments. The court will dismiss your lawsuit if you fail to make payments.
#11. Take the Course on Post-filing
You must enroll in the “debtor education” course, which is the second necessary class, before finishing your repayment plan. Before the court discharges any outstanding debt sums that qualify for a debt “discharge,” you must submit this certificate.
#12. Get Your Discharge from Bankruptcy
You’ll receive your bankruptcy discharge once you’ve finished your plan. Although some unsecured debts, such as the outstanding sums on student loans, won’t be automatically discharged, the discharge releases you from the duty to pay any unpaid balance on eligible unsecured obligations. Find more about debts forgiven at the conclusion of a Chapter 13 lawsuit.
If you’ve paid the sum specified in the plan and complied with all other conditions, congratulations are in order.
What Are Three Things You Cannot File for Bankruptcy?
The following are the three things you Cannot file for bankruptcy;
- Alimony and child support.
- Certain unpaid taxes, such as tax liens. …
- Debts for willful and malicious injury to another person or property.
What Happens When a Person Declares Bankruptcy?
Owners are released from obligations that have not been fully fulfilled to creditors. The process for filing for bankruptcy differs by nation. If you declare bankruptcy in the USA, it will likely negatively affect your credit rating, making it more difficult for you to obtain a new loan if you want to start over.
What Is the Downside of Filing for Bankruptcy?
Your future financial situation may be impacted by bankruptcy, which can stay on your credit report for 7–10 years. Your ability to obtain a mortgage or vehicle loan may be temporarily hampered if you file for bankruptcy. Not every loan will be erased.
Does Bankruptcy Stay for Life?
An individual’s credit may suffer after filing for bankruptcy, and the effects may persist for years. While a Chapter 13 bankruptcy typically remains on credit reports for seven years from the filing date, a Chapter 7 bankruptcy may stay on reports for up to ten years.
Does Bankruptcy Stay for Life?
Since some debts are not discharged by bankruptcy, it’s critical to determine which ones won’t be and to make arrangements for how to handle them. While in bankruptcy, you might need to continue making payments on some debts. When your bankruptcy is over, you can resume paying some debts that you had stopped paying.
Final Thoughts
There are drawbacks to filing for bankruptcy, but it might help you start over financially by wiping out unmanageable debt. If you have a bankruptcy on your credit history, it may be harder for you to receive loans in the future and hurt your credit score.
Consider all of your debt-reduction options before declaring bankruptcy, including a debt consolidation program and renegotiating your loan conditions with your lender. Think about speaking with a qualified financial counselor who can analyze all your options and walk you through how they would operate in your particular financial circumstances.
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