How To File For Bankruptcy
Filing for bankruptcy is a legal process that either reduces, restructures or eliminates your debts. Whether you get that opportunity is up to the bankruptcy court. You can file for bankruptcy on your own, or you can find a bankruptcy lawyer, which most experts regard as the prudent avenue to pursue.
Bankruptcy costs include attorney fees and filing fees. If you file on your own, you will still be responsible for filing fees. If you cant afford to hire an attorney, you may have options for free legal services. If you need help finding an affordable bankruptcy lawyer or locating free legal services, check with the American Bar Association for resources and information.
Before you file, you must educate yourself on what happens when you file for bankruptcy. Its not simply a matter of telling a judge Im broke! and throwing yourself at the mercy of the court. There is a process a sometimes confusing, sometimes complicated process that individuals and businesses must follow.
The steps are:
When Bankruptcy Might Be An Option For You
Bankruptcy might be an option for you if you have:
- nomoney – you have no money to pay your debts or you have so little that it will take many years for you to re-pay your debts
- debts of between £1,500 and £25,000 if you have debts of between £1,500 and £25,000, no disposable income and little property then you can apply for a shorter form of bankruptcy called the Minimal Assets Process . You can apply for MAP if your only income is from benefits or you have no disposable income
- at least £3,000 of debt – If you have £3,000 or more of debt, and you aren’t able to apply for the Minimal Assets Process bankruptcy you can apply for standard bankruptcy
- difficulty dealing with the people you owe money to if the people you owe money to will not negotiate with you or you are under excessive strain because of the situation
- unlikely to get more money your circumstances are unlikely to change in the near future.
Making The Best Decision For Your Finances
Filing for bankruptcy for a second time can be a difficult decision. It is important to talk to a Licensed Insolvency Trustee before acting. At MNP LTD, you can expect to receive expert advice from our highly-trained professionals, who want to help you make the most informed decision by discussing the pros and cons of a second bankruptcyas well as possible alternatives to bankruptcy.
If you choose bankruptcy, we can guide you through the bankruptcy filing process from beginning to end. Contact us today to schedule a no-obligation consultation and learn more about your options.
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States With High Numbers Of Bankruptcies
The number of annual bankruptcies varies widely by state. This is in part because bankruptcy policies are different in each state and because some states are more populous than others.
Additionally, studies have found that bankruptcy occurs more often in states with more lenient wage-garnishment laws.
The state with the most bankruptcies in 2011 was California, with more than 240,000. This accounted for 17 percent of all bankruptcies nationwide. At the other end of the spectrum, Alaska had fewer than 1,000 bankruptcies in the same year.
The five states with the most bankruptcy petitions in 2011 accounted for a disproportionate 38 percent of the years filings nationwide.
These states and the number of bankruptcies declared in 2011 are as follows:
Monitor Your Credit Score And Fix Your Credit Report
This third of our bankruptcy recovery steps is one that many people miss. Youll want to keep a closer eye on your credit score than you probably ever did before filing bankruptcy. You have to be able to see this score and how it changes in order to know what youre doing is making a difference. This means looking at your credit report and score more frequently than the free annual check to which everyone is entitled. You should be looking at your score and report on a monthly basis. One way to do this is by signing up for a free credit monitoring service. One of the big 3 credit bureaus, Experian offers free monthly access to your credit score and report, as does for the other two credit bureaus . This monitoring will help you stay on top of whats happening with your credit score, but its up to you to identify and fix errors on your credit report.
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Why Did Bankruptcy Filings Fall In 2020
It would be one thing if personal bankruptcy filings had held steady or gone up a little during 2020, but they fell sharply by 30% to the lowest level seen in more than three decades. One thing to keep in mind is that the bankruptcy courts were shut down for a significant period of time and many are still operating at lower capacity and remotely, so there may be people who want to file but dont because they dont even know if the system is really even functioning right now.
Then theres all the relief that has been made available. The federal government was quick with an initial round of relief payments extended unemployment benefits. Then those dried up. Then they finally passed more, but not nearly as much. With a new administration in charge, the relief may once again be on the horizon in a significant way. These relief measures in the form of stimulus payments and extended unemployment benefits may be just enough to keep most people afloat long enough to be able to recover without declaring bankruptcy.
Your Interview With The Official Receiver
If your bankruptcy is approved, youll have an interview with the official receiver. If youve presented your own bankruptcy petition, this might happen directly after the bankruptcy order is made. Alternatively, your letter from the official receiver may invite you to an interview either in person or by telephone. If offered a telephone interview you can ask to be interviewed in person, if you prefer.
If youve been made bankrupt by one of your creditors the official receiver may also contact you by telephone to find out if there is anything that needs to be sorted out urgently.
You must attend the interview and cooperate with the official receiver. If you do not, your bankruptcy could be extended beyond the normal 12 months and you could face an examination in court. The more organised you are, the more straightforward the process will be.
Before the interview, telephone the official receiver to confirm or rearrange the appointment let them know if:
- you require special facilities
- there is anything that needs to be sorted out urgently
- you need more time to gather the paperwork for the meeting
If you have been sent a questionnaire, fill it in, and note down anything you do not understand. If youre having a telephone interview, return it by the date given.
Collect together all the paperwork youve been asked to take to the interview or have with you during the telephone call.
Face-to-face interviews may take 2 to 3 hours.
After you arrive:
The examiner will:
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What Not To Do Before Bankruptcy
Debt can creep up on you. Perhaps you had a credit card that started out with a low interest rate. You have that credit available, so why not buy a couple of things that you wanted for a while, but haven’t been able to afford? Or, perhaps you’re using it to buy something essential. Either way, that interest rate suddenly balloons, or the amount you owe grows larger every month, until you simply cannot keep up.
That is the point when you might want to consider filing for bankruptcy. That’s a scary word these days, but the truth is it is meant to provide some protection, and a way forward, for people who are unable to pay their debts. Speaking with a lawyer or financial planner can be helpful, but if you find yourself in over your head, filing bankruptcy may be your only option.
That are lots of guides, and lots of people, out there that can help you navigate the first few steps in the filing process. However, there are some things that you definitely do not want to do before filing for bankruptcy.
5. Don’t Provide Inaccurate Information You are required, in the process of filing for bankruptcy, to provide full and complete information. Any debt, assets, accounts, and other financial information has to be provided. Attempting to hide information can, again, be considered fraud. Fraud is a serious issue, and can prevent debts from being discharged in bankruptcy proceedings. It can also potentially lead to criminal charges.
When Your Bankruptcy Will End
You will be freed from bankruptcy after 12 months. This ends the bankruptcy restrictions and releases you from most of the debts you had when the bankruptcy order was made.
Youll normally be discharged automatically, even if:
- no payments have been made to your creditors
- youre still paying an IPA or IPO
- some assets havent been sold yet
Assets you had during bankruptcy can still be used to pay your debts once your bankruptcy has ended.
Your bankruptcy can be extended for longer than 12 months if you do not co-operate with your trustee. Check your discharge date using the Individual Insolvency Register on our website. If your discharge status is suspended indefinitely you need to contact the official receiver for an update.
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A Creditor Making You Bankrupt
Your creditors can present a creditor’s petition if you owe them an unsecured debt of over £5,000. This may be the sum of two or more debts which total over £5,000. There might be different petitioning creditors on the same petition for different debts you owe.
Once bankruptcy proceedings have started, you must co-operate fully even if it’s a creditor’s petition and you dispute their claim. If possible you should try to reach a settlement before the petition’s due to be heard – doing it later can be difficult and expensive.
Obtain And Responsibly Use A Line Of Credit
Recovering after bankruptcy doesnt seem like it should include taking on new debt, but it often does. Your credit score going into bankruptcy may have already been very low. Filing for bankruptcy might have caused it to go even lower. When your Chapter 7 bankruptcy is discharged, your credit score wont immediately jump upwards. Why not? Youd think it would since you will probably have the best debt-to-income ratio youve had in while with all that debt wiped away. But while that ratio is important when lenders are considering you for a loan, its not very important to your credit score. What plays a much larger role in shaping your credit score is your track record of responsibly using your available credit. Thats what you need to establish moving forward to see your credit score begin to rise.
If your primary type of debts were credit card debts, you might decide to give up on credit cards in favor of paying cash for everything. But thats not going to help improve your credit score or build a track record of responsibly using credit. Cash transactions arent reported to credit bureaus! What gets reported to credit bureaus are when you make on-time monthly payments on a line of credit. And yet here you are with a bankruptcy red flag on your credit report, which means getting that line of credit might be difficult. Here are three ways to accomplish this step:
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Chapter To Chapter Options
Chapter 7 to another Chapter 7 bankruptcy 8 years Chapter 7 now filing for Chapter 13 bankruptcy 4 years Chapter 13 now filing for Chapter 7 bankruptcy 6 years Chapter 13 to another Chapter 13 bankruptcy 2 years
The wait times help prevent abuse of the system and high credit card debt that cannot be repaid. You are expected to make your best effort to pay off bankruptcy in between filings.
What Happens To Your Information
Any previous name included in the bankruptcy petition will appear on the bankruptcy order, and in the:
- notice of your bankruptcy, which is permanently recorded in the Gazette but excluded from search engine results one year and three months after publication
- Individual Insolvency Register which will be removed within three months of your discharge
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Consecutive Chapter 13 Bankruptcy Cases: 2 Years
The least amount of time possible between consecutive bankruptcy filings is with a Chapter 13. After a Chapter 13 discharge, you could conceivably attempt another in as little as two years from the date the first Chapter 13 was filed. However, most Chapter 13 payment plans take place over the course of 3-5 years, so a two-year interval is very optimistic because receiving a discharge before the three-year minimum repayment plan is highly unlikely.
What Happens Once I Make The Person Bankrupt
- The trustee will notify the person of their bankruptcy.
- The trustee will send the person a Bankruptcy Form including instructions how to complete the form online. The completed form will need to be submitted within 14 days.
- The earliest day that the bankruptcy can end is 3 years and 1 day after acceptance of the Bankruptcy Form.
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How Many Times Can I File For Bankruptcy
This depends on the type of bankruptcy you file for.
A Chapter 7 bankruptcy petition:
- Can only be filed once every eight years. The eight years starts from the filing date, not the discharge date.
- Can be filed anytime after the completion of a Chapter 13 case, unless the unsecured creditors in the Chapter 13 case received less than 70 percent of their claims, in which case there is a six-year waiting period.
A Chapter 13 bankruptcy petition:
- Can be filed anytime after the completion of a Chapter 7 case. Although, if it is filed less than four years after the Chapter 7 filing, the debtor will not be eligible for a discharge at the end of the case.
- An additional Chapter 13 bankruptcy petition can be filed anytime after the completion of a Chapter 13 case, unless the case lasted less than two years, in which case the debtor would have to wait until the two years is up.
All of these scenarios assume that the first case was completed and discharged. If the first case was dismissed, as opposed to discharged, then there is no time bar to refiling, except in certain situations.
If you have had a case dismissed within the last year, there may be some issues with refiling, depending on the circumstances. If you have this situation, contact our firm online, Schwartz Bankruptcy Law Center, to schedule a free initial consultation and discuss your situation and debt relief options.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
Filing Under Different Chapters: The Order Matters
Here are the waiting periods when a second bankruptcy case is a different chapter than the one you received your first discharge in.
Chapter 13 before Chapter 7
- If the court granted your first discharge under Chapter 13 bankruptcy, you’d need to wait six years before filing for a Chapter 7 discharge. You won’t have to wait that long however, if you paid unsecured creditors in full in the Chapter 13 case, or if you paid at least 70% of the claims, the plan was proposed in good faith and was represented your best effort.
Chapter 7 before Chapter 13
- If the court granted your first discharge under Chapter 7, you’d have to wait four years from the Chapter 7 filing date before filing a Chapter 13 case.
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The Bankruptcy Filing Process
There are a number of legally required steps involved in filing for bankruptcy. Failing to complete them can result in the dismissal of your case.
Before filing for bankruptcy, individuals are required to complete a credit counseling session and obtain a certificate to file with their bankruptcy petition. The counselor should review your personal situation, offer advice on budgeting and debt management, and discuss alternatives to bankruptcy. You can find the names of government-approved credit counseling agencies in your area by calling the federal bankruptcy court closest to you or by visiting its website.
Filing for bankruptcy involves submitting a bankruptcy petition and financial statements showing your income, debts, and assets. You will also be required to submit a means test form, which determines whether your income is low enough for you to qualify for Chapter 7. If it isnt, you will have to file for Chapter 13 bankruptcy instead. You will also need to pay a filing fee, though it is sometimes waived if you can prove you cant afford it.
You can obtain the forms you need from the bankruptcy court. If you engage the services of a bankruptcy lawyer, which is usually a good idea, they should also be able to provide them.
Assuming the court decides in your favor, your debts will be discharged, in the case of Chapter 7. In Chapter 13, a repayment plan will be approved. Having debt discharged means that the creditor can no longer attempt to collect it from you.
Limitations On Frequency Of Bankruptcy Filings
While the time-related limitations on second or successive bankruptcy cases are typically discussed in terms of time between filing, this waiting period does not actually prevent you from filing an additional bankruptcy case. The statutory limitation actually refers to the availability of a discharge in the second or subsequent bankruptcy case. So, when you hear shorthand like, you cant file again for eight years, its generally not technically true.
However, the benefits of bankruptcy are significantly limited if the debtor is not eligible for a bankruptcy discharge. This is especially true with Chapter 7 bankruptcy cases, since the discharge is the primary purpose of a Chapter 7 bankruptcy case. Therefore, it would usually be pointless to file a second Chapter 7 case before the waiting period had expired. In addition, a filing undertaken with knowledge that a discharge wasnt available, such as for the sole purpose of delaying an impending collection action, could be deemed abusive.
Because the discharge is not the core benefit in a Chapter 13 bankruptcy case, the analysis is a bit different. A Chapter 13 case in which a discharge of remaining unsecured debt is not an option may still be beneficial, since the debtor can still take advantage of the three to five year repayment plan to spread out past-due payments and cut down on accruing late fees and other charges. In addition a no discharge chapter 13 can still stop a foreclosure or a repossession.
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