Steps to filing bankruptcy
If you’re thinking about filing a bankruptcy then obviously you want to know all about it that you can. Looking up information on the Internet is a good way to start. Here are the steps to filing bankruptcy.
The first step in filing for bankruptcy is making the decision to file.
Assuming that you have already sought the advice of a trained and seasoned (preferably board certified) counselor who has advised you regarding all the pros and cons of both the non-bankruptcy and bankruptcy options available to you, and assuming that you have decided that a bankruptcy is in your best interest, the next step will be to begin gathering all the information that is necessary to properly file the bankruptcy petition.
But wait. . .
People who are interested in learning all of the steps to filing a bankruptcy have put the cart before the horse, so to speak.
What I mean is this, rather than focus on the steps to filing bankruptcy, a better question to ask is whether or not you actually need to file bankruptcy.
In about 30% of the people who I counsel, the answer is no.
In fact, bankruptcy is not the best answer for everyone. Sometimes debt management, debt settlement, or other non-bankruptcy options will work as well as or even better than a bankruptcy. So, in these cases, we never get to talk about the steps to filing bankruptcy because we really need a different approach.
Bankruptcy petition preparation is a very involved and labor-intensive process. It requires a high level of attention to detail and thoroughness.
All bankruptcy petitions need a certain minimum number of documents and other information which has to be provided to the court in order for the court to properly consider and process your bankruptcy case.
At a minimum, information in the form of documentation about your income, all the assets that you own, cars, houses, etc. has to be provided to your bankruptcy attorney. Also, your tax returns for the last several years are required to be produced as well.
Most attorneys have a list of documentation that they give to their clients in order to help them assemble all this information so that they can be properly prepared and presented to the trustee and the court.
The amount of information and documentation that goes into preparing a bankruptcy petition properly is considerable. It is beyond the ability of most consumers to properly prepare a bankruptcy petition, in part, due to the complexity and sheer volume of information required.
If all these steps are not properly followed, the bankruptcy trustee may refuse to approve the bankruptcy petition and require the consumer to try again.
Recently, I was waiting my turn to meet with the trustee. My client and I saw several cases, where consumers were represented by attorneys, that were not approved, and the attorney was sent back to his office to “try again.” This should illustrate the level of difficulty involved in properly preparing the bankruptcy petition. After all, if the attorney didn’t get it right the first time, how much more difficult will it be for someone who’s not trained in bankruptcy law.
Assuming that all of the information is properly prepared and provided to the trustee in the court, and the meeting with the trustee goes well, there is often additional paperwork that needs to be filed in a typical chapter 7 case.
Reaffirmation agreements, when you choose to keep your automobile, for example, are typically filed after the trustee meeting and again, these documents are complex and have to be submitted properly or they will not be accepted by the court. In some situations, when these documents are not filed within the timeframe allotted by bankruptcy law, it is possible for consumers to have problems keeping their cars. There are strict time frames within which certain things have to be done and unpleasant consequences can result if these deadlines are missed.
If all goes well, then, about five months after the chapter 7 case is filed, you will get a final discharge from the court, and the case is over.
There are other steps that happen in cases where there is distribution made to creditors, but that’s not common in most chapter 7 cases.
The next steps?
Well, they are not part of the bankruptcy case, but are, nonetheless, very important to your financial recovery. Most bankruptcy attorneys don’t tell their clients this, in my experience.
The next steps in the financial recovery process (which is what I like to focus on) is to begin rebuilding your credit. There is definitely a right way to do this, and after a bankruptcy case it’s critical that you follow them.
The next step after that, or sometimes done at the same time, is to work on your credit score. There are a series of steps that everyone who files a bankruptcy should take in order to be sure that the debts that they discharged in their bankruptcy are reported as being discharged. If you don’t check you wont know.
If you don’t know to check you won’t check.
How many people don’t even know to check? Lots, in my experience. And, they have a lot to lose if they don’t .
So, the steps to filing bankruptcy are, in my practice, only a part of the entire picture. There are more to follow after the bankruptcy is over.