Bankruptcy is the process where a person legally declares themselves unable to pay outstanding debts. Depending on the type of bankruptcy filed, one meets with a judge to determine a payment schedule, or have a legal bankruptcy discharge most if not all debts.
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What do I need to do to file for bankruptcy?
The bankruptcy process involves several steps. The amount of time it takes to complete the process will vary. We recommend that you hire an attorney to walk you through the process. You will be required to participate in a Pre-Petition Bankruptcy Counseling Course. This should be the first step you take, either before or after you hire an attorney. Depending on how you prefer to be counseled, SurePath (CCCS) provides this service for $40 - $75. Contact us today to set up an appointment or you may choose online counseling. Click here to apply for a fee waiver.
Prior to discharge, you will also need to complete a Pre-Discharge Debtor Education Course.
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Do I need to go to court to file?
Yes. You will need to attend a "Meeting with the Creditors." This could last less than an hour through Chapter 7 to an entire day through Chapter 13.
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What are the steps to filing bankruptcy?
- Pre-filing Bankruptcy Counseling: Before filing a Chapter 7 or Chapter 13 Bankruptcy, an individual must first attend budget and credit counseling within the 180 day period prior to filing. They will be given a certificate that is required to be filed with the bankruptcy petition
- Filing the Petition: An individual must file a Chapter 7 or Chapter 13 Bankruptcy Petition with the Clerk of the United States Bankruptcy Court. The petition must be accompanied by the filing fee, Statement of Financial Affairs and Schedules, documents disclosing a full and accurate depiction of their financial circumstances, and the pre-filing bankruptcy counseling certificate.
- Creditor Stay: Filing of a bankruptcy petition will stop creditors from taking any action to collect debts.
- “341” Creditor Meeting: An individual will need to attend a hearing in which the creditors may ask questions of the debtor about their finances. The debtor must respond under Oath. The Bankruptcy Trustee attends the meeting
- Complete a Personal Financial Management Course: Prior to your discharge and within 45 days from the “341” creditor meeting, an individual must complete an approved instructional course on personal financial management and obtain a “pre-discharge” certificate. The certificate will need to be filed with the court.
- Granted a discharge of the debts: A discharge is court order that prevents a creditor from taking any action to collect a debt. The debtor does not have to repay a debt that has been discharged Back to top
How long will bankruptcy show on my credit report?
References to bankruptcy filing will remain on your credit report for seven to ten years after you've completed the process. It is likely that during the first year, you may find it very difficult to obtain credit. It does get easier though. You should consider waiting at least a year, preferably longer, before you make a large purchase on credit. You will save a tremendous amount of interest.
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What are the different types of bankruptcy?
Chapter 7:
Under a Chapter 7 of the Bankruptcy Code, a Trustee is appointed to sell or liquidate any of the debtor’s “non-exempt” assets or property in order to raise cash to make payments to creditors. “Non-exempt” assets include but are not limited to a second car, vacation home, stocks, bonds or investments. The majority of Chapter 7 cases are “no asset cases” in which the Trustee determines that there are no “non-exempt” assets that are required to be liquidated to pay creditors. In these cases, the debts were simply discharged.
Eligibility of a Chapter 7 Bankruptcy is determined by the Means Test. If your income is less than the median income for families in your state or your current monthly income minus allowable expenses leaves you with less than $100 per month, you may qualify for a Chapter 7 Bankruptcy
Secured debt, such as home mortgage or car loan, can be kept by signing a “reaffirmation agreement”
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In a Chapter 13, an individual with regular income repays all or a portion of his or her debts over a three to five year period through a monthly payment plan approved by the Bankruptcy Court. The Chapter 13 Trustee does NOT take possession of non-exempt assets but supervises the case and administers the payments to the creditors. Payment amount is determined by income and allowable expenses. In order to file a Chapter 13, an individual has to have regular and stable income to make the Chapter 13 payments.
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How much is the bankruptcy filing fee?
Depending on your financial circumstances, you may be able to pay the filing fee in installments or have the fee waived. The court makes the determination.
Chapter 7: $306
Chapter 13: $281
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* Can't file within 8 years of filing a previous Chapter 7
* Can't file within 6 years of filing an earlier Chapter 13
* Can't file within 4 years of filing a previous Chapter 7
* Can't file within 2 years of filing an earlier Chapter 13
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