Chapter 7 Bankruptcy and Chapter 13 Bankruptcy
Most individual debtors either file Chapter 7 or Chapter 13 bankruptcy. A bankruptcy attorney can advise a potential client of which bankruptcy chapter he is eligible for, but without legal assistance, the person must decide that on his own. Chapter 7 bankruptcy is for people with an income that doesn't exceed the median income level for their household size. People with an income greater than the state's median income level can also qualify for Chapter 7 if they have high basic living expenses.
If a person makes too much money to qualify for Chapter 7, he can file for Chapter 13 bankruptcy. Chapter 13 debtors often include people who fall behind on their mortgage payments but want to keep their property. If the person can afford to complete a three to five year payment plan based on the amount of his disposable income, then he can file Chapter 13 bankruptcy.
The bankruptcy petition is available on the district bankruptcy court website. Fill out the entire bankruptcy petition. Read the instructions provided with each form prior to listing the information in the petition. Include all assets and debts in the case. If all sources of income and assets are not included in the bankruptcy, it may jeopardize the case. When all of the debts and creditors are not disclosed, it can prevent those debts from being discharged in the bankruptcy.
Prior to filing the bankruptcy petition, debtors must complete credit counseling. Credit counseling agencies suggest debt relief options outside of bankruptcy and help debtors assess their budget based on their current income and expenses. Credit counseling must be taken within 180 days before the bankruptcy case starts. The U.S. Department of Justice provides a list of credit counseling agencies within each state. After the credit counseling is finished, the agency will provide a certificate of completion.
File the Bankruptcy Case
Some states have various court locations. The court where the case should be filed is based on the debtor's place of residence. The bankruptcy court website will list the court locations that have jurisdiction over the different counties throughout the state. Call the court to confirm the proper location to file the case. Review the bankruptcy fee section on the court website to find out the cost of the filing fees and acceptable methods of payment. Submit the appropriate filing fee, the bankruptcy petition, and the credit counseling certificate of completion to the court clerk. Promptly read any notices received from the court. Complying with court orders is necessary to complete the case and receive a discharge.
Financial Management / Debtor's Education
After the case is filed, the debtor needs to complete a financial management or debtor's education course. The debtor's education course gives advice regarding how to handle finances and manage fiscal responsibility. The debtor's education provider will submit a certificate of completion once the course is done. File the certificate of completion with the bankruptcy court. Failure to submit the certificate of completion can cause the case to be dismissed and the court will not grant a discharge.
Even though it is possible to file for bankruptcy without an attorney, hiring an attorney with an in-depth understanding of bankruptcy law can increase the chances of successfully completing the case. Deciding to file for bankruptcy should be undertaken with careful thought and consideration.