Going Bankrupt

Now that started down the going bankrupt path, and introduced you to the different chapters, it’s time to dig a little deeper. We want to arm you with knowledge you need of bankruptcy court and the proceedings so you’re comfortable and confident going bankrupt. This is by no means an exhaustive list, however, we hope that these finer points will help you know what to expect when going bankrupt.

Going Bankrupt Documentation

Documentation: As you prepare for going bankrupt, there are four main types of materials you need to gather. They include: paystubs or other forms of income verification, all pertinent creditor information (how much you owe to whom and creditor contact information), asset information, and the last two years of filed tax returns. (Four years of tax returns are usually required for a Chapter 13 filing.)  If you don’t have any of these items, it’s ok, there are ways to work around it when going bankrupt.

Going Bankrupt Petition

Petition: This is the form that gets the going bankrupt process rolling and officially opens a bankruptcy case. The petition must be filed with the bankruptcy court in the federal judicial district where the debtor lives. This form officially identifies the request for debt relief or going bankrupt.

Going Bankrupt Schedules

Schedules: The debtor must disclose all information about assets, debts, income and expenses as well as describe his or her financial affairs and circumstances when going bankrupt.  There are bankruptcy court forms which are used for these disclosures.

Going Bankrupt Means Test

Means Test: This form determines whether or not the debtor can file for Chapter 13 or Chapter 7 when going bankrupt. The amount of money that remains each month, after bills and basic household expenses are paid, helps the court determine whether or not a debtor is eligible for Chapter 13 versus Chapter 7 bankruptcy.

Going Bankrupt Credit Counseling

Credit Counseling: Before going bankrupt, a debtor must complete credit counseling provided by a government-approved agency. The purpose of this counseling session is to discuss budgeting and options. Upon completion, a debtor will receive a certificate that must be filed with the bankruptcy court when going bankrupt. Failure to complete credit counseling may result in the dismissal of a case.

Going Bankrupt Meeting of Creditors

Meeting of Creditors: Approximately one month after going bankrupt, a debtor must attend a hearing that is held outside of the courtroom, without a judge.  A bankruptcy trustee assigned to the case, whether it’s Chapter 7 or Chapter 13 bankruptcy, will lead the meeting. In this meeting, a debtor’s debt and assets are reviewed to determine if going bankrupt is reasonable.  Creditors are invited to attend and can ask debtors questions about assets or other matters pertaining to the case. If they choose not to attend, creditors retain all rights.

The steps and forms outlined above apply to all debtors going bankrupt, generally the very first step in going bankrupt is to speak with a qualified bankruptcy attorney. We recommend that if you are thinking of going bankrupt, you reach out to one of our experienced attorneys at McFarlin LLP. We will lead you through the process, focusing on protecting your assets and help guide decisions that are in your best interest. We always offer a free consultation either on the phone or in person.