Clayton Law Offices: Bankruptcy

Filing Process

Chapter 7

The process begins by us discussing your situation and the options that are available to you. An important step in the process is the information gathering. I will need documents from you such as tax returns and paystubs, as detailed below. In addition, you will have to complete a course online or over the telephone called "credit counseling". This course will take approximately one hour and will have you think about your income and expenses. At the end of the course you get a certificate. This certificate is a requirement to file for bankruptcy. After you have completed the course and I have all of your documentation, then I finalize your bankruptcy petition. Your petition is a lengthy document that details your current financial situation: what assets you own, how much income you earn, what your monthly expenses are, and who you owe money too. Once your paperwork is completed, there is a meeting where we review, together, all of the paperwork. After review, you sign the paperwork "under the pains and penalties of perjury". The paperwork is then filed with the Bankruptcy Court.

This is the official start of your bankruptcy case. At the time of filing you are assigned a case number. Once your case is filed, it is approximately three months until your case is completed. However, despite the three month time period, the filing date is the important date. At that date, all action against you is stopped. All lawsuits are stopped and any garnishments are stopped.

After the filing of your bankruptcy case, you will complete a second course, again online or over the telephone. This course is called "financial management" and will take you about an hour to complete. The goal of this course is to provide you with money management tips and budgeting going forward.

Approximately one month after your case is filed, we will attend a 341 meeting. This meeting is referred to as a "meeting of creditors", although it is very rare that a creditor attend this meeting. This meeting does not take place in a courthouse and is not before a judge. It is before a trustee, who is also an attorney. During the meeting, the Trustee will ask you for proof of your identification, and confirm that you understand that you are filing for bankruptcy. He or she will then ask you a few questions to determine if there are any assets or income that have not been disclosed in your paperwork. Some sample questions are "are you the beneficiary of any trust", "does anyone owe you money", "do you have any reason why you could sue someone, for instance, a personal injury or medical malpractice". All of the questions that you will be asked will be related to information that we have already discussed.

After this meeting there is nothing else for you to do. The rest of the three month time period is just a waiting period. Once your case is over, you receive a "discharge". This means that your legal liability to pay back the debt covered in your bankruptcy is "discharged", it is gone forever.

That’s it. The process is relatively simple: Working to gather your financial information; two courses online or over the phone; and one meeting with a Trustee. Going through the bankruptcy process is relatively painless.

Documents needed for Chapter 7

2 years tax returns
6 months proof of income
If employed - paystubs
If self-employed - profit and loss
If retired - statement showing benefits
If unemployed - statement showing benefits
401K/retirement - statement for each
Value of home - appraisal or brokers price opinion or comparative market analysis
Bank - statement for each account
Car registration - if married
Bills including car loan statement and mortgage
Life insurance policy - statement not needed if policy is through employer
Divorce agreement, if divorced

Chapter 13

This is the official start of your bankruptcy case. At the time of filing you are assigned a case number. Once your case is filed, all collection activity against you is stopped, this includes lawsuits and wage garnishments.

Approximately six weeks after your case is filed, we will attend a 341 meeting. This meeting is referred to as a "meeting of creditors", although it is very rare that a creditor attend this meeting. This meeting does not take place in a courthouse and is not before a judge. It is before the Chapter 13 Trustee, who is also an attorney. During the meeting, the Trustee will ask you for proof of your identification, and confirm that you understand that you are filing for bankruptcy. She will then review your paperwork and ensure that your plan of repayment is "feasible". This means that there is enough income coming in to enter into a plan of repayment. She will also ensure that your creditors are being paid what they should be, whether it is a 0% plan or a 100% plan.

After the filing of your case, you will continue to make regular payments on your secured debt (your mortgage and car loans). Approximately one month after filing, your first plan payment to the Trustee is due. Your plan payment amount is calculated depending on your income and expenses and what debt has to be paid (for instance, all past due mortgage debt must be paid in full if you are going to keep your house).

Your particular plan will dictate how long you are in bankruptcy. The plan can be as short as 36 months and as long as 60 months. We make that decision together.

Documents needed for Chapter 13

2 years tax returns
6 months proof of income
If employed - paystubs
If self-employed - profit and loss
If retired - statement showing benefits
If unemployted - statement showing benefits
401K/retirement - statement for each
Value of home - appraisal or brokers price opinion or comparative market analysis
Bank - statement for each account
Car registration - if married
Bills including car loan statement and mortgage
Life insurance policy - statement not needed if policy is through employer
Divorce agreement, if divorced
Homeowners insurance declaration page
Auto insurance declaration page

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