Steps Involved To File Bankruptcy

Any debtor being harassed by creditors and unable to pay off the debts incurred will seriously start enquiring about bankruptcy filing. Once the debtor has decided to file for bankruptcy, they have to fulfill certain legal conditions and take other steps for the filing to be successful.

Take a Class

Before filing for bankruptcy, the debtor needs to take a class called credit counseling from a counseling center authorized by the United States Trustee’s office. This is a mandatory requirement for filing for bankruptcy protection.

Organize Papers

The debtor needs to have papers that reflect both their debts and assets. The debtor needs to make a list of all assets, such as property or shares owned. Remember to include both exempt and non-exempt assets under proper heads. The second list should have the complete details of all debts owed by the debtor. This includes list of creditors with names and addresses. You also need pay stubs, other proof of income, and tax returns. This information needs to be provided to the bankruptcy trustee in a proper format.

In case a business is filing for bankruptcy, information on assets and receivables as well as inventory and ledgers need to be collated.

Retain an Attorney

Now the debtor has all the information needed by the attorney. The debtor now needs to talk to an attorney and get legal advice pertaining to their unique situation. The debtor needs to take all the papers and information gathered in the previous stage to the attorney. By presenting the attorney with a full and true picture of the situation, the debtor will help the attorney decide on the best course of action.

File for Bankruptcy

After assessing your financial situation, the attorney will be able to guide you in choosing the appropriate bankruptcy protection. The attorney will also file your bankruptcy protection claim and represent you.

Meeting the Trustee

The next step is to meet the trustee along with your attorney. The trustee will review your papers and check if you have included all non-exempt assets in the right category.

Turn over Property

Once the trustee is sure that you have indentified all non-exempt property, you will have to turn these over to the trustee. The trustee will sell this property to discharge your debts.

Reorganization Plan

Some bankruptcies require a reorganization plan. If one is needed, your attorney will help you formulate the plan and submit it in court. Once these steps are completed, the court will normally accept the recommendation of the bankruptcy trustee and forgive your debts.

It is best to consult a lawyer to decide on the bankruptcy you want to apply for. By having an attorney help you fill the relevant forms and represent you in court, you increase your chances of success.