Filing for bankruptcy can be time-consuming and stressful. For most first-time filers, gathering the right documents and evaluating the advantages to filing will be the best way to get through this process.
Actions Prior To Filing
Before you file bankruptcy, make sure that filing is necessary for your situation. To help you decide access the following three factors.
Factor 1: Assess all finances, reasons for filing, and filing consequences. It's important to understand what Chapter 7 filing means, and how it will benefit you.
Ask what other options are there before filing? What can you change now that will positively affect your situation in the next 3 to 6 months? What changes are within your means and abilities? What assets are youI willing to surrender or keep?
You may be able to negotiate with your creditors for help or forgiveness. For instance, you may negotiate a new repayment plan if you're struggling with your current bills, or receive partial or full debt forgiveness.
In addition, you can make lifestyle changes to help keep you afloat, such as getting a roommate, selling your car, renting a smaller apartment, or selling some property to help pay off debt.
You also have to determine whether or not you are eligible for Chapter 7 bankruptcy filing. Generally, you must have an income that is at or below your state's median income or you must have enough disposable income to pay back creditors if your income bracket is above the median. Through your analysis, you might find that you are more qualified to file for Chapter 13 bankruptcy, which has its own pros and cons.
If you've analyzed your situation extensively and find that bankruptcy is the best solution, then you can begin the pre-filing process.
Factor 2: Complete credit counseling. Before you file, you must complete pre-filing credit counseling within 180 days before filing. The counseling course must be completed with an accredited agency, and the certificate must be filed when you or your attorney file your case.
Pre-filing credit counseling is important, not only because it is a required component to filing for bankruptcy but also because it can help you find other alternatives and best solutions for your finances. The counseling agency can help you understand not only the terms and conditions of Chapter 7 bankruptcy but will help you make sure that filing for bankruptcy is the best option.
Factor 3: Make key changes that will affect your filing. This might mean stopping automatic payments to creditors before the bankruptcy process begins. You will also want to withdraw money from the bank you owe and place it in another account with a different bank.
Preparing Documents and The Creditors Meeting
When it comes to filing, you will need to have specific financial documents on-hand for your bankruptcy attorney, your case, and your creditors. Most documents will relate to your income, property, and debts. Things that you should have as a copy for yourself and your bankruptcy attorney include:
Your list of creditors and lenders
Pre-filing credit counseling certificate
Proof of income and pay stubs
Most recent copy of your tax returns
All divorce or domestic support orders: if you pay alimony or child support, you'll need copies for both your attorney and the trustee
With all these documents, your attorney will be able to file for your case. You'll then have a creditors' meeting (also known as a 341 meeting): this is where creditors and the trustee will ask you questions about your finances and relevant information.
Before the court grants your bankruptcy discharge, you will then have to complete a debtor education course. After you complete your debtor education course and file the certificate, your debt will be discharged!