Bankruptcy Overview

Many people who have found themselves struggling financially. Bankruptcy may be just what is needed. With a chapter 7 discharge, you can eliminate many debts in a short period of time. A chapter 13 can also discharge many debts while reorganizing your remaining obligations into a manageable repayment plan. However, there are many factors to consider and steps that must be taken.


What is Bankruptcy?


Bankruptcy is a tool in the federal legal code that helps consumers deal with overwhelming debt. Chapter 7 and Chapter 13 are the two used for consumer bankruptcies. 


Many factors can lead a consumer into need to file for bankruptcy protection.   The most common reasons for filing include medical debt, job loss, and divorce.


If you have found yourself falling behind on credit card, loan, medical, utility, or debt collection payments, or are using lines of credit for essentials like groceries and gas, bankruptcy may provide you the relief you are looking for. Additionally, bankruptcy can help permanently resolve many past and present civil judgments, unemployment, social security overpayments, and taxes.


There are benefits to filing bankruptcy over other forms of debt relief. One of the most notable is the Automatic Stay which forbids debt collectors from contacting you or moving forward with their own legal remedies outside of the bankruptcy court. After your case is discharged, most of your debt is permanently wiped out. With a Chapter 7, your filing date to discharge is usually 90-100 days. 


A Chapter 13 is similar to a debt consolidation, backed by the Federal Government.  These are usually called a "wage-earner's" bankruptcy.  However, Chapter 13 bankruptcy is very useful for man situations.  If you have fallen behind on your mortgage or car payment, we can propose a plan to cure that arrearage in a Chapter 13 case.  Chapter 13 cases typically last 3-5 years.


Do I qualify?

While there are many factors to consider while seeking a solution to excessive debt, bankruptcy is an option available to anyone. Your financial situation will determine which chapter bankruptcy will best fit your individual circumstances. 


How do I file?


The following is a general overview on the steps required to file bankruptcy.


Pre filing Requirements

  • Consult a bankruptcy attorney: It is always best to consult a bankruptcy attorney when considering filing. Based on the information provided, they will determine if bankruptcy or other debt mitigation measures would be more beneficial. 
  • Complete pre-filing credit counseling course: This course can be done in person or online and takes around 1.5 hours to complete. A certificate of completion for this course is required within 6 months prior to the filing of your case. 
  • Provide requested paperwork and documentation: You will need to provide proof of income, expenses, financial statements, tax returns and other applicable documents. 
  • Sign the petition: By signing the voluntary petition, you are swearing under oath all of the information provided is true and accurate. This step starts your case and ends when the bankruptcy judge issues an order of discharge.


Post filing requirements

  • Attend 341 Meeting of Creditors: At this hearing, a bankruptcy trustee will ask you questions under oath based on their review of your bankruptcy schedules and provided documents. Your creditors can also attend this meeting and ask questions; however, this is rare. 
  • Complete post filing debtor education course: This course can be done in person or online and takes around 1 hour to complete. A certificate of completion for this course is required within 60 days after your meeting of creditors.


There are also steps to avoid that my hurt your case, whether intentional or not. You must be honest and accurate in disclosing all assets and accounts. Do not transfer money or assets to separate accounts or other individuals. Do not “max out” your credit cards in anticipation of filing. Additionally, do not file any lawsuits, cash out retirement accounts, or fail to file taxes.




Attorney Robert Shelton, PLC is dedicated to helping clients get the most out of bankruptcy protection. We can help you navigate the process and determine what type of bankruptcy, if any, is right for you.