Deciding to file for bankruptcy is a huge step in repairing credit and rebuilding your finances, but the process can prove daunting. Understanding the filing process makes bankruptcy less stressful and more successful.
The Chapter 7 bankruptcy process begins when a debtor files a petition with the bankruptcy court where he or she lives or the business is organized or has its principal place of business or assets. The Bankruptcy system is administered by the United States Federal Court system. Each state has at least one Federal District Court through which at least one Bankruptcy Court is maintained. Pennsylvania has three District Courts, the Eastern, Western and Middle District bankruptcy courts. In addition to filing a petition in the proper court, the debtor must also file additional documents:
- Schedules of assets and liabilities
- Schedule of current income and expenses
- Statement of financial affairs
- Schedule of executory contracts and unexpired leases
To complete these forms, you need a list of all creditors including the amount and type of claims, information on your income, a list of all property and a detailed list of living expenses. When a trustee is assigned, debtors must also provide a copy of tax returns or transcripts for the most recent tax year and any filed during the case. Individual debtors with primarily consumer debts have additional required filings:
- Certificate of credit counseling
- Copy of debt repayment plans
- Evidence of payment from employers
- Statement of monthly net income and expected increases in income or expenses
- Record of any interest in qualified education or tuition accounts
Debtors in bankruptcy also file a schedule of exemptions among other documents and may choose between federal and state exemptions. An experienced attorney can help you evaluate both options to determine which exemptions would better benefit you.
Filing for bankruptcy automatically stays, or stops, most collection actions by creditors, although not all, and in many cases, for only a short time. But this relief, even when only temporary, gives debtors the chance to reevaluate finances and work out a solution to troubling debt problems. Skilled bankruptcy lawyers offer the help you need during this difficult time, taking on the burden of the complex bankruptcy filing so you can get the relief you need and deserve.