Are you thinking about filing for bankruptcy? This process can seem daunting and overwhelming in the midst of an already stressful time. Here are the basic steps in the filing process:
1) Review Your Finances & Compare Against Monthly Expenses
It is important that you know how much you owe and who you owe. Sort through all of your bills and create a list of all your creditors and how much you owe each of them. Many people avoid looking at this information because it causes more stress. Ignoring it will not make it go away. Although it may be stressful for you to face this list, it is the first step in organizing yourself. If necessary, ask a trusted friend or family member to help you compile the list. The most important thing is to make sure you have everything listed.
2) Attempt to Modify Any Outstanding Loans or Debts
Contact each of your creditors. Many of them will be likely to consider modifying your payment plans or accepting a lower payoff amount. Take the time to explain to them that you are trying to take care of your outstanding debts and that you hope to work together. Often times, the first person you get on the phone will not have the authority to accept a modified payoff or change payment terms. Don't be afraid to ask for a supervisor. Be sure to keep good records of when you have contacted each creditor and what terms were discussed.
3) Be Aware of Any Upcoming Foreclosures or Judgments
When you are facing an upcoming foreclosure or judgments, it is important to know that you are now working against the court's timeline. It is important to know what dates and limitations they have placed on you. If you are facing a foreclosure or judgments, it is very important to contact an attorney to assist you. They will be able to tell you the next steps you should take.
4) Hire an Attorney
If you are facing the need to file for bankruptcy, this is not a time to try to take on representing yourself. Creditors are very skilled at this process. They can and will do everything they can to make this process more challenging for you. Although the idea of spending more money on hiring an attorney may seem unreasonable at this time, it is the best first step you can take. Bankruptcy attorneys can walk you through the process and help you along the way, providing the much needed relief you are seeking.
5) Take a Credit Counseling Class
Part of the bankruptcy process will require you to take two credit counseling classes. These classes are necessary before your filing is complete, and one will need to be taken for your bankruptcy to be finalized. Your attorney can offer you a list of agencies that offer these courses. The cost ranges from $25 and up, per class.
Pre-Bankruptcy Credit Counseling: The bankruptcy law requires that you complete an instructional course concerning personal financial management in order to file bankruptcy. Your attorney cannot file a petition until you complete the course and obtain a Certificate of Completion from the Agency you choose.
Pre-Discharge Debtor Counseling: This course is to be completed after your credit counseling course is complete and you have filed for bankruptcy. You cannot discharge your debts until you complete the course and obtain a Certificate of Completion from the Agency you choose.
6) File Your Bankruptcy Petition
After you have completed the above steps, and your attorney has received all of the necessary documents, they will file your bankruptcy petition. The amount of time it takes to get to this point is often times up to how quickly you obtain all the required documents and get them to your attorney. Understandingly, it is often challenging to gather required documents, like pay stubs, W-2s, and other tax documents. However, your attorney can not move forward without them. Once the petition is filed, your attorney will advise you of the next steps.
7) Attend the 341 Hearing or Meeting of Creditors
Your attorney will let you know when the 341 Hearing or Meeting of Creditors is scheduled, usually about 30 days after your petition is filed. At this meeting your creditors will be able to ask you questions regarding outstanding debts. Although this meeting may sound scary and uncomfortable, you can be assured that your attorney will help you prepare for the process and will be with you throughout the meeting.
8) Obtain Your Discharge Order in the Mail
You should received your discharge notice in the mail approximately 60 days after the meeting of creditors, notifying you that your filing is complete. Note: Some debts are not subject to discharge, such as student loans. It is important that you are clear on what you still owe.