How to File Bankruptcy: A Step-by-Step Guide

Nowadays, there’s been a whole lot more filling than we’ve ever seen before. We are all led to believe that filing for bankruptcy is a means to solve our debt problems, but it is not.

People are often unaware of what bankruptcy is because they have no information about the process.

 Bankruptcy is a legitimate debt-relief option if an individual or a company is unable to meet its financial obligations that fall below its due date. Under federal law, it is your right to seek bankruptcy relief from creditors. If you feel you have no choice but to file for bankruptcy, here are some basic information to help you better understand the intricacies of bankruptcy. 

Types of Bankruptcy

Chapter 7 Bankruptcy

Bankruptcy is sometimes referred to as a “Fresh Start” bankruptcy, or “liquidation”. Through this, all debts are eliminated after the bankruptcy is discharged. However, the court will assign a trustee to take over your non-exempt properties to pay the creditors.  You will need to make an agreement with the trustee to buy back your non-tax-exempt property such as your house, car, or business.

Chapter 13 Bankruptcy

Also known as “reorganization” or “Wage earner’s plan”, allows you to keep your home or car that you might otherwise lose due to overdue payments. The Chapter 13 option allows you to pay arrears of three to five years, divided into regular monthly payments, for the first three years of your bankruptcy. Some cases of bankruptcy are different, such as a medical emergency, a financial emergency, or a business failure.

 Benefits of bankruptcy

  • Elimination of liability of debt.
  • Halts the foreclosure of your home from moving forward so that you catch up on missed payments.
  • Prevents repossession of a car or other property.
  • Stop collection agency harassment. 
  • Prohibit utility service termination, which may occur due to non-payment of bills.
  •  Reinstate a suspended driver’s license.

 Transferring Properties Prior to Filing A Bankruptcy

 Selling or obtaining a property within one year before filing bankruptcy can be considered a fraudulent transfer. You cannot “get” property before you file for bankruptcy, or transfer it to a friend or relative, and get it back after filing the bankruptcy. However, you can sell non-exempt properties before you file for bankruptcy and use the money to buy things that are exempt. 

Filing for bankruptcy 

In any case, it is advisable to consult a lawyer before filing for bankruptcy to see the extent of its implications. Here is what you need to know if you are considering filing for bankruptcy:

 Bankruptcy Application Process

 If you want to file for bankruptcy, you must appear in the courthouse before the federal judge and answer financial concerns from the creditors. The filing process will then take four to six months for the final filing. 

The Cost of Bankruptcy 

 In general, the bank will charge the bankruptcy filing fees for the bankruptcy for all other expenses such as court costs and taxes. For filing a petition under Chapter 7, the fee is about $200. The cost to file a petition for Chapter 13 is about $185.00. The fees are payable to the court when the case is filed. 

 Impacts of Bankruptcy in Credit Ratings

 You will have to deal with the consequences of bankruptcy on your credit rating for up to 10 years. However, you can still get a credit card from the company that charges you a higher interest rate, but only for a limited period.

Filing for Bankruptcy without an Attorney

You can also file bankruptcy by yourself with the help of books and do-it-yourself kits. Chapter 7 bankruptcy is easier than Chapter 13. However, as these cases have legal problems, there are many things, which you may not know how to handle without an attorney. We advise that you seek the advice of an attorney before filing for bankruptcy and for the entire bankruptcy process. 

Why Avoid Filing for Bankruptcy?

Bankruptcy may look like an attractive debt relief option, but it comes with a number of penalties. Here are a few things, which may follow bankruptcy:

 Filing Case with a Bankruptcy Lawyer

 It is good to consult with an experienced lawyer before filing for a bankruptcy case. You can schedule an appointment for an initial bankruptcy consultation. Also, check the fees for the services and whether they charge for other services such as insurance, insurance cover, etc. You can also hire a non-lawyer to produce the documents for a fee, but it is not a good idea to use their services for this.

 Filing for Bankruptcy without an Attorney

 Individuals can file bankruptcy without an attorney, which is called “pro se”. Use a helpful bankruptcy book and guide to make careful preparations and understanding of the legal process. Chapter 7 bankruptcy is easier than Chapter 13. However, if you do not follow the proper procedures, it could affect the outcome of your case. 

 Why Avoid Filing for Bankruptcy?

 Bankruptcy may seem an easy and attractive option for those whose finances have collapsed, but it comes with a number of penalties. Here are the few advantages following a bankruptcy:

  • Not all debts can be discharged or eliminated.
  • Severe impact on your credit rating.
  • According to Chapter 7, you can lose properties including car, house, and all your assets. 
  • Repayment plan in Chapter 13 lasts between three to five years.
  • Non-exemption of tax refunds and earned income credits.

If you are struggling to pay your debts and need more detailed information about the intricacies of bankruptcy or need a bankruptcy alternative, call CreditGUARD of America’s credit counseling services today at 800-282-8497 or visit CGOA website at One of our Credit Counselors is ready to help you at every stage of your financial crisis with ready answers, guidance, and innovative debt consolidation services. You may find that there are better, easier, and less painful alternatives to filing bankruptcy, that will have significantly better outcomes for less money.


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