Today's Topic

When I started this post, I thought it would be a quick list of bullet points about what happens when you file bankruptcy. Then I started writing and found out it was a bit more complicated. So, this is only part one. Not sure how many parts there will be.

Before we get started, a quick answer to a question that gets asked a lot: from the date you file a chapter 7 bankruptcy, it generally takes between 4 and 6 months to receive your discharge (usually closer to 4 months).

Here’s how to get started:

· Do your research. There’s a ton of information about bankruptcy online so do a little research and familiarize yourself with some of the terms, the different types of bankruptcies, and find answers to some of your questions. A good place to start is the Bankruptcy Court’s website: www.uscourts.com. Check the box for Debtors and get started. You can also go to my website which covers a lot of the basics (as well as back issues of Bankruptcy Basics): www.bankruptcysage.com.

 · Start gathering information and documents.

a. Start with your credit report. You can get a free report from one of the credit bureaus (Experian, Transunion, or Equifax). Look for any errors (like a debt that isn’t yours), report it to the credit bureaus and ask them to correct it. Check to see if any creditors are missing (doctors and other small companies usually do not report to the credit bureaus).

b. Make a list of all your creditors, including addresses, the last 4 digits of your account number, and the approximate amount owed.

c. Download copies of your last 3 bank and credit card statements. Once you file, your online access will probably be shut off so it’s important to make hard copies for your records. You’ll need some of these for the trustee once you file.

d. Make a copy of your photo ID and Social Security card. If you can’t find your original Social Security card, go online (or to the nearest office) and order a new one.

e. Find copies of your most recent Federal and state tax returns. You’ll need these for the trustee.

· Consider hiring a local bankruptcy attorney.

a. You can Google local attorneys and review their ratings on Google or Yelp. You can check for referral services on the Bankruptcy Court website, check with your local bar association, or check out Justia.com.

b. There are also petition preparers that can help you prepare and file yourself. Find them on Google. Or check out www.upsolve.org. If you qualify, they’ll help you for free.

c. If you want to hire an attorney (highly recommended), make an appointment for a consultation (usually free). If you don’t like the first attorney, check out one of two more.

d. Most bankruptcy attorneys will charge a flat fee for representing you, plus the court filing fee of $338. The amount of the fee varies by location and by the nature of your case. You will need to make a down payment to the attorney, with the balance due before the petition is filed if you are filing a chapter 7. Most do not accept credit cards (cash, check or debit card). And most won’t allow installment payments after the petition is filed. If you file a chapter 13, the fees will be higher, but you may be able to make installment payments as part of your plan.

· If you want to do it yourself: download the petition package off your local Bankruptcy Court website (make sure you get the site for your local court because the forms and rules differ slightly from court to court). These forms are interactive and can be filled out online. The website will also have instructions on how to pay the filing fee and file the case in person or electronically. Or check out upsolve.org.

· Take the credit counseling course: One of the requirements for filing an individual bankruptcy petition is an online credit counseling course. A certificate of completion must be filed along with the bankruptcy petition. You can find a list of authorized providers on your local bankruptcy court website. Again, make sure you are on the local website because not all companies are authorized in all districts. This course is mostly a nuisance course because it rarely helps anyone avoid bankruptcy. It doesn’t take very long, and it usually doesn’t cost much.

Tip for the Week: Check to see if your income falls above or below your state’s median for your family size. If it’s less, you qualify to file chapter 7 without doing any more. If it’s above, you have to pass the means test and you’ll probably need an attorney to make sure you do it right. You can find the information at https://www.justice.gov/ust/means-testing.

Next Week’s Topic: What happens once your bankruptcy case is filed?