For many people, bankruptcy is a fairly simple process that can be completed without paying an attorney. Other cases are more complex, and the small legal fees you pay an attorney could result in a large amount of financial savings through debt discharge and deferment. Most individual consumers, though, can file bankruptcy on their own as long as they have a good reference manual to guide them through the process.
Chapters and Counseling
Bankruptcy comes in several different varieties. For individuals, meaning people, not businesses, the debtor can choose between Chapters 7, 11 or 13. Most of the time, which chapter to file under is a choice that the debtor must make. Some people, however, cannot file Chapter 7. The rules governing Chapter 7 eligibility are complex.
Generally speaking, Chapter 7 bankruptcy is the most extreme form of bankruptcy. Under Chapter 7, you will sell off many or most of your property and then use the money to pay off as many debts as possible. All remaining debts are then discharged.
While it is possible for individuals to file under Chapter 11, this is not typically recommended, especially without an attorney. Chapter 11 is extremely complex and it is common for attorney fees to exceed $100,000.
Chapter 13 is a form of bankruptcy that allows the debtor to prepare a debt repayment plan. If the court accepts the plan, creditors are required to accept payments under that plan. Most of the time, the payments are reduced and repayment terms are extended.
Before you file under any Chapter, though, you will need to complete a credit counseling course from an approved credit counseling agency. You can find a list of approved agencies using the link provided below in the resources section.
Locate the Nearest Bankruptcy Court
Bankruptcy courts are part of the U.S. federal court system, but they are located in each of the 50 states (See Reousrces). Most states have one central bankruptcy court, typically located in the state capitol. If you don't live near the court, you can mail all of the required documents, and then when it is time for a hearing, you will have to travel to the court to attend the hearing.
If you ever have procedural questions, such as what documents to file, and where and how to file, you can always call the court clerk of your nearest bankruptcy court. You can find their information on your court's website.
Find a Reference Manual and Forms
Sometimes your creditors can force you into bankruptcy, but most often the debtor is filing a voluntary petition. The voluntary petition is the first of many forms that you will have to file with the bankruptcy court. The voluntary petition initiates your bankruptcy case. You can find a bankruptcy form in a good reference manual, such as the one listed in Resources, that can help guide you through the bankruptcy process and can provide a collection of bankruptcy form.
You can also find good forms on many bankruptcy court websites. The link provided in Resources provides excellent information and resources to guide you through the bankruptcy process.
- Nolo's The New Bankruptcy: Will It Work For You?; Attorney Stephen Elias; 2009
- Nolo's How to File for Chapter 7 Bankruptcy, Attorney Stephen Elias, Albin Renauer, J.D. & Robin Leonard, J.D. (15th Ed. 2008)