Home> Credit Library

Filing for Bankruptcy

Just like some people prefer to handle their own credit repair, some also prefer to handle their own bankruptcy and save the attorney fees. Most of us are not equipped to file and process our own bankruptcy. It's complicated and if its not done right, there is a lot to lose. To see what debts can be discharged in a bankruptcy click here. A bankruptcy case is commenced by the filing of a petition. You must also file a statement of your assets and liabilities, and schedules listing your creditors. If you choose to file a bankruptcy petition without the assistance of an attorney, you can obtain the required forms at most stationery stores or at www.uscourts.gov/bkforms/index.html.

Article I, Section 8, of the United States Constitution authorizes Congress to enact "uniform Laws on the subject of Bankruptcies." Under this grant of authority, Congress enacted the "Bankruptcy Code" in 1978. The Bankruptcy Code, which is codified as title 11 of the United States Code, has been amended several times since its enactment. It is the uniform federal law that governs all bankruptcy cases.

The procedural aspects of the bankruptcy process are governed by the Federal Rules of Bankruptcy Procedure (often called the "Bankruptcy Rules") and local rules of each bankruptcy court. The Bankruptcy Rules contain a set of official forms for use in bankruptcy cases. The Bankruptcy Code and Bankruptcy Rules (and local rules) set forth the formal legal procedures for dealing with the debt problems of individuals and businesses.

There is a bankruptcy court for each judicial district in the country. Each state has one or more districts. There are 90 bankruptcy districts across the country. The bankruptcy courts generally have their own clerk's offices. Before filing for bankruptcy, we recommend that you review the changes to the bankruptcy law. If you have questions about filing for bankruptcy, we recommend consulting with a licensed attorney.

Most common bankruptcies filed

Chapter 7, entitled Liquidation, contemplates an orderly, court-supervised procedure by which a trustee takes over the assets of the debtor's estate, reduces them to cash, and makes distributions to creditors, subject to the debtor's right to retain certain exempt property and the rights of secured creditors. Because there is usually little or no nonexempt property in most chapter 7 cases, there may not be an actual liquidation of the debtor's assets. These cases are called "no-asset cases." A creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case and the creditor files a proof of claim with the bankruptcy court. In most chapter 7 cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts. The debtor normally receives a discharge just a few months after the petition is filed. Amendments to the Bankruptcy Code enacted in to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 require the application of a "means test" to determine whether individual consumer debtors qualify for relief under chapter 7. If such a debtor's income is in excess of certain thresholds, the debtor may not be eligible for chapter 7 relief.

Chapter 13, entitled Adjustment of Debts of an Individual With Regular Income, is designed for an individual debtor who has a regular source of income. Chapter 13 is often preferable to chapter 7 because it enables the debtor to keep a valuable asset, such as a house, and because it allows the debtor to propose a "plan" to repay creditors over time – usually three to five years. Chapter 13 is also used by consumer debtors who do not qualify for chapter 7 relief under the means test. At a confirmation hearing, the court either approves or disapproves the debtor's repayment plan, depending on whether it meets the Bankruptcy Code's requirements for confirmation. Chapter 13 is very different from chapter 7 since the chapter 13 debtor usually remains in possession of the property of the estate and makes payments to creditors, through the trustee, based on the debtor's anticipated income over the life of the plan. Unlike chapter 7, the debtor does not receive an immediate discharge of debts. The debtor must complete the payments required under the plan before the discharge is received. The debtor is protected from lawsuits, garnishments, and other creditor actions while the plan is in effect. The discharge is also somewhat broader (i.e., more debts are eliminated) under chapter 13 than the discharge under chapter 7.

Bankruptcy cases cannot be filed in state court. Bankruptcy cases are handled only on a federal level through one of the U.S. Bankruptcy Courts. For further information about bankruptcies, or a bankruptcy case, you will need to contact the bankruptcy court that will handle the bankruptcy.

Bankruptcy case information can also be found online through the Public Access to Court Electronic Records (PACER) system. Please note there is a user fee for accessing information through the PACER system. You may also wish to view information about finding an attorney. You can also refer to the bankruptcy glossary for meaning of bankruptcy terms.

The U.S Government provides some bankruptcy videos to help educate the public. You may also download our Bankruptcy Basics in PDF provided by LawInfo.com

Related: Your credit after a bankruptcy | Bankruptcy and your car

Portions of this article has been put together using resources from the U.S Gov website and Wikipedia. These resources have been cited because of their usefulness and bipartisan help for the consumer and the readability of the filing process. Please do not let this article replace your need for a qualified bankruptcy attorney. This article, How to File Bankruptcy, is provided for informational purposes only.