If you find bankruptcy staring right in your face, it is time to become proactive. And one of your first actions should be to contact an experienced bankruptcy lawyer in your state. A lawyer is simply indispensable in leading you through the intricate steps of bankruptcy. The first question that will arise in filing bankruptcy is which chapter should it be filed under. It is your lawyer who will decide it for you, taking into consideration whether you are a business or an individual, your debt status and other associated questions. Read this article to learn more about bankruptcy checklist for both Chapter 7 and Chapter 13.
Types of bankruptcy
There is provision for several types of bankruptcy under the US Bankruptcy Code:
- Chapter 7 bankruptcy: Mentioned under ‘Liquidation’ title in the Code, your assets, under this chapter, are sold for cash and your creditors are paid. You can file a chapter 7 bankruptcy where there is little or no non-exempt property. A ‘means test’, instituted in the Bankruptcy Code, determines your income level. This indicates whether you are eligible for personal bankruptcy under this chapter or not. You should also have the documents needed to file Chapter 7 bankruptcy.
- Chapter 13 bankruptcy: The Code mentions this type of bankruptcy under the title as ‘Adjustment of Debts of an Individual with Regular Income’. It is most suited for those holding a regular income. Unlike Chapter 7, there is no liquidation of assets in this chapter, and you get to retain your valuable assets, such as car and house. However, you need to repay your creditors under a plan that may extend up to three or five years. A Chapter 13 bankruptcy protects you from wage garnishments, lawsuits and other actions by creditors. Chapter 13 checklist gives the list of documents needed and you can obtain it online.
- Other types: Besides these two types there are three more types of bankruptcies – Chapter 11 for businesses, Chapter 12 for farmers and fishermen and Chapter 9 for bankruptcy faced by cities or municipalities. For Chapter 11 bankruptcy you will need to present the documents mentioned in the business bankruptcy checklist.
Working of bankruptcy courts
Although your lawyer is well versed with bankruptcy courts, it is still a good idea for you to get acquainted with its working. In the US, there is one bankruptcy court in each judicial district, and each state has at least one district.
A bankruptcy court is totally dedicated to bankruptcy cases, much like civil and criminal courts. The judges of such courts are fully empowered to decide on eligibility issues and for granting debt discharges.
Unlike other courts, much is done outside the bankruptcy courts, such as appointing trustees to carry out administrative duties in all types of bankruptcy cases. This results in the minimal interaction of the debtor with the bankruptcy judge.
In fact, most applicants filing for Chapter 7, don’t even have to visit the court and only do so if there is any objection to the bankruptcy plan. In the case of Chapter 13, the debtors have to visit only once for the bankruptcy confirmation hearing.
Bankruptcy documents checklist
One of the most important roles of a lawyer, besides deciding which chapter to file the case under, is to tackle all the documentation involved in such cases. This involves the following:
- Filling out a questionnaire: The questionnaire enables the court to know your details, such as debts, assets and income over the last few years.
- Collecting documents: These documents primarily support whatever you have stated in the questionnaire. The copies of such documents are also given to the trustee. This helps to verify the information provided in the petition and schedules.
- Credit counselling: This is a mandatory condition for those who file for bankruptcy. You need to complete the first course within six months before the debtor files for bankruptcy. You can complete the credit counselling course online itself.
Pre-filing bankruptcy checklist for the debtor
- Signs a Retainer Agreement with the bankruptcy lawyer, thereby initiating filing bankruptcy petition.
- Earns a certificate of credit counselling course, after completing it successfully.
- Forwards pay stubs of last 60 days before petition filing to the lawyer. In its absence, executes a financial affidavit.
- Provides duly completed Client Intake Form to the lawyer.
- Hands over all documents listed in the Client Document Checklist Form to the lawyer.
- Reviews and executes a bankruptcy petition, before it is filed in the bankruptcy court.
Post-filing bankruptcy checklist for the debtor
- Undertakes debtor education course and earns a certificate.
- Forwards copy of the latest tax return to bankruptcy trustee seven days before the meeting of creditors.
- Presents the following in creditors meeting:
- Photo identification.
- Proof of social security number.
- A copy of latest tax return filed that was forwarded to the bankruptcy trustee.
- Credit reports from the three main credit reporting agencies.
List of documents to be submitted by the debtor
This includes a list of documents that are also included in the chapter 7 bankruptcy document checklist:
- Consumer Credit Counseling certificate
- Bankruptcy packet with revenue and expenditures.
- Photo Identification and Social Security Card.
- Income proof for the last 6 months.
- Bank account statements for the last 3 months.
- Most recent tax returns (state and federal) with IRS Form W-2 or Form 1099 for the last 2 years.
- Retirement, 529 educational savings accounts, and life assurance policies statements.
- Latest mortgage statement.
- Real estate mortgage or deed related copies.
- Lease contract or rental agreement.
- Divorce judgment and Property Settlement Agreement.
- Personal details and contact information of the individual who receives child support.
- Proof of any transfers, sales, gifts, trades or any property related gifts in the last 2 years.
- Evidence of charity or donations if it is more than $100 per month.
- Payroll contact information to send notice to prevent wage garnishment, if being garnished.
In addition to the above-listed documents, debtors also need to submit the copies of the following:
- Formal notice of foreclosure
- Notice of Trustee Sale (NOTS)
- Wage garnishment orders
If you are already in possession of these documents, it will take only a few days for your lawyer to prepare and file for bankruptcy. Bankruptcy filing offers you protection, making you immune to creditors calling, threatening or suing. It will also prevent repossession, foreclosure and garnishment.
It is quite evident that documents play a significant role, especially in filing for bankruptcy. Make sure to refer this bankruptcy checklist before booking your preliminary bankruptcy consultation.
David Galler is an experienced bankruptcy attorney based in Atlanta, Georgia. For the last 29 years he has filed over 10,000 bankruptcy cases. He has a FIVE STAR client rating on Avvo, Kudzu.com, RateABiz.com, and Google+, among other sites. Over 99% of all Chapter 7 cases he filed have been discharged.