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How to Get Out of Debt by Filing for Bankruptcy

cluttered-bills-debtBeing in debt can feel overwhelming and extremely stressful, with creditors and collections agencies constantly breathing down your neck. Filing for bankruptcy is one way to help you get a fresh start and get you out of debt. However, most people don’t know how to get out of debt by filing for bankruptcy, which makes it a daunting task. Bankruptcy is a pretty difficult and strict process, so it is a good idea to have a bankruptcy lawyer to help you through it. Before you begin, consider the following steps to help you figure out how to get out of debt by filing for bankruptcy.

Put Together A Spreadsheet Before Filing For Bankruptcy

Get organized and put together a spreadsheet of your whole debt situation. Basically, you need to know how much you owe in total. List the following in your spreadsheet:

  • Credit card debts
  • Mortgages
  • Car payments
  • Insurance.

Once you list who who owe money too, add the following information to your spreadsheet:

  • Monthly payment amounts to each
  • Your total debt owed to each
  • Date debt payments are due to each
  • Whether you consider that debt to be a priority

Find A Lawyer To Help You Start the Process of Filing For Bankruptcy

It would be in your best interest to find a lawyer and have him represent you in filing for bankruptcy. The process can be very intense and technical. A lawyer will make sure you file all the needed documents and make sure you spend as little time dealing with the courts as possible. You don’t want to forget about a necessary form or miss a deadline. Make sure you have a lawyer who is very familiar with the way things are conducted. A lawyer can also advise you about the proper course of action, and which form of bankruptcy is right for you.

Have Your Lawyer Get the Bankruptcy Petition Together

Your lawyer will get together a bankruptcy petition. This petition will consist of various documents and statements, such as:

  • The actual petition
  • The Schedules
  • Local forms
  • The “Means Test”

Have Your Income Information Ready For Your Bankruptcy Lawyer

When your lawyer puts together the petition to present to the court, he will need your income information. This is necessary for the Means Test part of your petition. Make sure your lawyer knows your current monthly income. Specifically, this is the average amount per month for the last six months. Do not include any social security income.

You Need to Go to Credit Counseling

You are required to go to a class before filing for bankruptcy. This class is a requirement that will only take an hour or two. Ask your lawyer to provide you information on where you can go to this class. Your lawyer is well aware of all your local approved providers that can conduct this class. Make this convenient and set it based on your schedule.

Make Sure Your Lawyer Has All the Forms

Bankruptcy courts require a lot of forms. Your lawyer will be putting everything together, but make sure you keep in contact with your lawyer during this time and ask him if he needs any information to complete these forms. The following forms will normally be required by a bankruptcy lawyer:

  • Statement of Social Security Number (Official Form B21)
  • Voluntary Petition
  • Exhibit C – if applicable
  • Exhibit D – Individual Debtor’s Statement of Compliance with Credit Counseling Requirement
  • Statement of Related Cases
  • Notice of Available Chapters [required for individuals whose debts are primarily consumer debts
  • Summary of Schedules and Statistical Summary of Certain Liabilities and Related Data
  • Schedules A through J
  • Declaration Concerning Debtor’s Schedules
  • Statement of Financial Affairs
  • Chapter 7 Individual Debtor’s Statement of Intention
  • Disclosure of Compensation of Attorney for Debtor (for petitions of persons who are represented by legal counsel or where an attorney has prepared the paperwork)
  • Declaration Re Limited Scope of Appearance Pursuant to LBR 2090-1, (if applicable)
  • Copies of all payment advices (pay stubs) or other evidence of payment received by the debtor from any employer within 60 days before the filing of the petition and optional form Debtor’s Certification of Employment Income Pursuant
  • Statement of Current Monthly Income and Means Test Calculation
  • Verification of Creditor Mailing List
  • Master Mailing List
  • Certificate of Credit Counseling

Ask Your Lawyer For the Date of Your Hearing

Once your lawyer has put together all the forms, he will file them with the court and get a date for your hearing. Call your lawyer and find out the date of this hearing.

Your Creditors Will Stop Calling

One of the best parts about filing for bankruptcy for many people is getting relief from creditors. Your creditors will be given notices in the mail that your lawyer has filed for bankruptcy with the court. Since they are now aware of this, they have to stop calling you. Your creditors now know all key dates in your bankruptcy process.

Mail Your Last Tax Return to the Assigned Trustee

The court will assign a bankruptcy trustee to your case. This trustee will need your last tax return. Once your lawyer gives you this mailing address, send it to him.

Prepare For Your Bankruptcy Hearing

To prepare for your bankruptcy hearing, you and your lawyer need to get a few documents together. These include:

  • Social Security Card
  • Driver’s License
  • Copies of all petition documents filed with the court
  • Copies of tax returns

Talk to your lawyer a couple days before the hearing and make sure you bring all the required documents. Ask your lawyer what questions you will expect to be asked in the hearing, and he will help prepare you for answering them.

You Need To Go To One More Class on Financial Management

You need to go to one last class. This is a class on personal financial management. You will then get a Debtor’s Certification of Completion form and certificate. Give this to your lawyer so he can file this certificate with the court. This needs to be done within the next 45 days. In about 3-4 months, you will get a notice in the mailing letting you know all your debts have been discharged.

Conclusion

Filing for bankruptcy is a process conducted by the courts in a strict manner. You don’t want to waste your time filing the wrong documents or fumbling through the process yourself. Find a lawyer who knows the ins-and-outs of the bankruptcy process and have him guide you, and before you know it you be able to get out of debt by filing for bankruptcy!