Filing for bankruptcy can be one of the most effective debt relief options available, particularly when it comes to eliminating large portions of debt. Under Chapter 7, an individual debtor can completely eliminate much of their debt, providing them with a fresh start and a new perspective on life. While there are several important consequences to consider before jumping into the process, claiming bankruptcy is often the only option for those who have exhausted traditional means of debt repair. If you think that bankruptcy is worth considering then perhaps you should read on to find out how to apply for bankruptcy the right way.
Regardless of whether you want to know how to apply for bankruptcy in California or any other state, there are several steps that must be taken before your debt can be addressed. The major steps in filing a bankruptcy claim are listed below –
1. You need to decide what type of bankruptcy is most suitable given your individual situation. The two most common types of bankruptcy are referred to as Chapter 7 and Chapter 13. Rather than delve into the specifics of each type within this article, feel free to check out the following links on our site: Chapter 7 bankruptcy information and Chapter 13 bankruptcy information. Also see Chapter 13 bankruptcy rules. In summary, Chapter 7 is a debt elimination plan that liquidates your assets to pay back your creditors, while Chapter 13 is essentially a repayment plan that allows you to retain your valuable assets.
2. You will need to compile a list of your debts and assets, which will be provided as part of the filing process. This information will also be used along with your household income to determine whether or not you qualify to file. This process is referred to as a “means test” and is a requirement of the bankruptcy court. For more information, consider heading to the U.S. Trustee Program’s Means Test Page.
3. You will need recent copies of your tax return statements, payment stubs and bank statements. If you don’t have these items then be prepared to ask the IRS, your employer and your bank for copies.
4. Register for a U.S. Trustee Program approved credit counseling course within 180-days of filing your claim. It’s important to retain a copy of your completion certificate as proof that you completed the course as required. This is required before filing under Chapter 7 or 13.
5. Unless you’ve decided to hire a bankruptcy attorney to assist you with your case, you will need to print out and complete bankruptcy forms from the U.S. Bankruptcy Court. You will find detailed instructions along with the forms.
6. Once you’ve filled out your forms you will need to submit them to your local division of the U.S. Bankruptcy Court, unless you’ve hired a lawyer to do this for you. You will need to pay a fee of $300 at the time of filing unless you demonstrate proof of hardship.
7. After applying for bankruptcy you will need to attend a ‘341 Meeting,’ which is also known as a meeting of creditors. It’s essential that you take note of any court notices that are delivered. If everything goes as planned, your case should be complete within 6 months or less.
For more information on filing bankruptcy and for a complete guide on how to claim bankruptcy, please feel free to browse through our comprehensive list of articles. We also offer a free bankruptcy evaluation that can be used to determine whether or not bankruptcy is the right option for you.