Although several alternatives to filing for bankruptcy exist, these alternatives don't work for everyone. For those in dire financial situations, filing for personal bankruptcy can provide huge relief. Depending on the type of bankruptcy, the debtor may either have all debts dismissed immediately upon bankruptcy approval, or she may pay part of her debts off on a significantly reduced payment plan to the court. Either way, the reduction in monthly payments lowers the financial strain, giving the debtor the ability to regain control of her finances. Filing for personal bankruptcy isn't easy, and proper preparation is necessary for a smooth and successful bankruptcy filing.
Step 1
Obtain your credit report. The government offers free credit reports online from the three main credit reporting agencies: Experian, TransUnion and Equifax. These three agencies also offer a detailed list of creditors on their own sites, but access is costly, and the extra detail isn't necessary for bankruptcy filings.
Step 2
Gather all your documentation before filling out the paperwork or meeting with an attorney. Courts require five years worth of personal tax records attached to the filing, along with up to three months of current pay stubs or other proof of income. Also, the filing includes a list of all creditors, so use the information from the credit report as well as current bills to list exact debt amounts and the creditors to which they're owed. Bring proof of all assets as well, including checking, 401(k) and savings accounts.
Step 3
Hire a reliable bankruptcy attorney. Bankruptcy law is extremely complicated. To prevent mistakes that could cause problems with bankruptcy approval or creditor inclusion, a reputable attorney is the best choice. Personal recommendation is likely the best way to choose a bankruptcy attorney; otherwise, take advantage of free consultations with local attorneys to find the right fit.
Step 4
Undergo credit counseling. Anyone filing for bankruptcy must partake in credit counseling services before filing for bankruptcy. This counseling must take place up to 180 days before filing and must be provided through an approved vendor. These providers include both local and online agencies. Bankruptcy attorneys provide lists of approved providers to their clients.
Step 5
Appear in court. Bankruptcy court proceedings involve going before a trustee, taking an oath and answering questions about the bankruptcy filing. Creditors are also present if they have any objections to the filing. The trustee goes over everything from your income to debts to repayments, if applicable. Review the filing prior to the court date to ensure its accuracy.
Step 6
Amend the filing if needed. If the trustee requires any changes to the filing, meet with your attorney and adjust the papers. Sometimes the trustee simply requires more documentation, such as proof of a medical disability or proof of living expense estimates listed in the filing. In these cases, give the papers to your attorney, and he can provide the trustee with the information.
Step 7
Complete a debtor education course so the bankruptcy discharge can occur. Like the prebankruptcy counseling, these courses are available both locally and online. Complete this course by the discharge date, because the bankruptcy trustee can dismiss the case if it's not finished.
Tips and Warnings
- Credit counseling and debtor education courses each cost between $50 and $100. If you are unable to pay, talk to your attorney or the agency to apply for a fee waiver for these services.
Things You'll Need
- Copy of credit reports
- Last five years of tax returns
- Proof of income for last 90 days
- Asset listings
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