In order to file a bankruptcy case, you need to know all your assets. You need to know all your debts. So gather up all of your bills, from credit cards to mortgage and car payment slips. Include medical bills, parking tickets, tax records and anything else that shows what you might owe a creditor. It doesn't matter if you don't know the exact amount. As a matter of fact, even if you might owe somebody money, and even if it is disputed, your bankruptcy lawyer will want to know about it.
Make a general list of everything you own. This includes all of your household goods. It also includes your bank accounts, your insurance policies and anything else which has value or entitles you to money. Don't forget to include any lawsuits you have against anyone for anything, including personal injury claims or civil rights lawsuits. Even a claim for sexual harassment is an asset of your estate
Find a good bankruptcy attorney
Avvo is a great place to find a good bankruptcy attorney. Check out recommendations from satisfied clients and peers. Consider whether the attorney files a lot of consumer bankruptcy cases. Consider whether the attorney is considered a leader in the field. Consider whether the attorney is board certified. Look for board certified attorneys at www.abcworld.org. Consider whether the attorney is active professionally. Check out www.nacba.com. This is the website of the National Association of Consumer Bankruptcy Attorneys.
You could also check whether the attorney has suffered disciplinary sanctions. Avvo has this information online too.
You'll want to discuss attorneys fees and costs in advance. Your attorney should give you detailed bankruptcy disclosures as well as a proposed fee agreement, in writing, at your first meeting.
You can't file a consumer bankruptcy case without first taking a consumer credit counseling course. Don't forget to do this. It takes about an hour or two. If you don't take the consumer credit counseling course, your case will be dismissed.
The Means Test - Are you eligible for Chapter 7 or Chapter 13?
You'll need to gather more records for this. You'll need pay stubs from work for the last six months. You'll need records about how much you pay on your mortgage and car loan. You'll need proof as to how much you spend per month on medical expense and communication expense. Your lawyer will ask you for other data as well. You must be very careful to be accurate about this. If you don't "pass" the means test, your chapter 7 case might be dismissed. Work carefully with your attorney. This is a trap for the unwary. The means test is how we determine whether you are eligible to file a case under chapter 7 or must file a case under chapter 13.
Your petition and schedules
You'll need to work with your attorney to develop a budget of your current income and expenses. So keep in mind how much you spend on housing, food, medical expenses, insurance, and other similar expenses in your household. This budget is important in developing a plan to pay your debts in a chapter 13. It is also important to see whether you must file a chapter 7 or a chapter 13 case. In chapter 13, you'll spend 3-5 years paying your disposable income to a trustee. This money will be used to pay some or all of your debts.
Once this is done, you'll work with your attorney to prepare your bankruptcy petition - the paper which takes you into court - and schedules which show all your assets and liabilities. You'll also complete a Statement of Financial Affairs.
Tell the truth in all respects. Don't hide anything. Otherwise, you could lose your right to a discharge and may even be committing a bankruptcy crime.
The "341 Meeting of Creditors"
After you file your bankruptcy petition, you'll attend a meeting with your attorney. There, you will meet a trustee, whether you file a case under chapter 7 or chapter 13. The chapter 7 trustee will want to know if you have assets he can sell to pay creditors. The chapter 13 trustee will want to know if your plan is acceptable and can be confirmed. So answer all her questions completely and carefully.
Always bring your social security card and a government issued photo identification card to this meeting.
You will be sworn as a witness and must answer all questions truthfully.
It is not as scary as it sounds.
Take the financial management course
After you file your bankruptcy case, you must take another course - the financial management course - in order to receive your discharge in bankruptcy. Don't forget to do this. If you do forget, bad things happen to you. Your case will be closed without a discharge. Then creditors will have the right to continue to collect from you even though you did file a bankruptcy case. You'll have to pay a fee of at least $250 to reopen your case, just to file the certificate of financial management course and you may have to pay an additional attorneys fee too.
Reaffirm Debts if Advisable
If you have a debt secured by property, it may be advisable to reaffirm that debt, either on the original terms or better terms negotiated for you by your attorney. You'll have to sign an agreement to do so. You'll have to be able to afford to pay the reaffirmed debt. If it looks as if you won't be able to pay, you'll be invited to court where you will have to explain to the judge how you can afford to continue to pay.
It may or may not be to your advantage to reaffirm any given debt. Discuss this with your attorney.
Your Discharge - Your Credit
Keep your discharge and treat it as an important document. Send it to all of the credit reporting agencies. These are Experian, Equifax and Trans-Union. Start rebuilding your good credit by paying your obligations on time. Check your credit report 6 months after bankruptcy to be sure that old debts are no longer listed. Challenge anything that's wrong. And if need be, call your attorney and ask him or her to take steps to correct any errors.
You will be solicited for credit card offers after bankruptcy. Accept them sparingly and never accept a credit card or other offer which you absolutely positively can afford to honor. You will be on your road to financial recovery and a fresh start in your life.
Additional resources provided by the author
Detailed information about consumer bankruptcy cases can be found at the sites of the American Bankruptcy Institute and the Administrative Office of the United States Courts