Filing for bankruptcy is no small task, and it is recommended that you seek out legal help from an attorney, like David B. Packard and his team. Whether you attempt the process on your own, or hire an attorney, here are the steps you can expect.
Assess your Income and Assets
- Take note of all the income you have received in the past 6 months, whether that be from a job, family member, investments, or other source.
- Take inventory of anything you own that has value such as cars, a home, art, collectibles, and personal possessions.
- Finally, make a list of all your monthly bills like rent, mortgage, food etc.
Research Property Exemptions
- You will list all of your assets in the bankruptcy for a trustee’s review.
- Find out if your property is exempt (protected) from being sold to pay your creditors. Every state has their own exemption laws that determine what kind of property can be kept when bankruptcy is filed. For example, in Texas, a person’s homestead and most personal belongings are protected and considered exempt.
- Can I own anything after Bankruptcy? Yes! This article explains which property is expempt.
Review your debts
- Take a careful inventory of all your incurred debt to determine if your debts are secured or unsecured. Typically, a secured debt is one that has been collateralized by an asset. This means you have agreed to hand over the asset like a car or home if you can no longer make the payments.
- Have a list of your creditors with their billing addresses. At the Packard Law Firm, we’ll pull your credit report to ensure that all your creditors are listed.
- It is also important to know that some debts, such as child support obligations, are not dischargeable in bankruptcy, while other debts can be eliminated, such as most credit cards, medical bills and signature loans.
Disclose your household income for qualification purposes
- The bankruptcy courts ask you to disclose your average household income for the six months prior to the time you file for bankruptcy. Common documents used to show income history include: pay-stubs, bank statements, tax returns, W2’s, VA benefits letter, or a letter from someone who contributes to your household. Some types of income are excluded, for example, income that comes from Social Security benefits will often be excluded from bankruptcy.
- If your income is more than the median income for a family of your size in your state, you may not be able to file a Chapter 7 bankruptcy, and will need to look into a Chapter 13 instead, unless you have extraordinary living expenses which are reasonable and necessary.
- Find out if you'd benefit more from a Chapter 7 or a Chapter 13 bankruptcy
Because of the complexity of various bankruptcy laws, it is highly recommended that you hire a qualified attorney to help you sort through this difficult analysis. David Packard is a board-certified bankruptcy attorney in San Antonio that has been helping individuals with these challenging decisions for more than 23 years.
Attend a creditors meeting
- A couple of weeks after you file, all the creditors you listed will be given notice of a creditors meeting appointment. It is held 25-45 days after the date of filing.
- This is a required meeting, where the bankruptcy court trustee asks questions about your financial situation, and you testify that the information you included in your bankruptcy is correct. This is typically the only legal proceeding that you are required to attend.
- The trustee will look at your paperwork and examine your nonexempt property to see if it can be sold to repay your creditors. Most property is either exempt, or not worth the trustee’s time to sell
- In a chapter 7, after the trustee confirms that your property is protected and you can’t afford to pay back your creditors based on your income, then the remaining unsecured debts will then be wiped out. Eliminating your legal obligation to repay discharged debt gives you and your family a clean slate and fresh start and will ultimately help you get back on your feet and provide for your family once again.
- In a chapter 13, after the creditors meeting with the trustee is around the same time that your first bankruptcy plan payment will be due. Your plan payment is sent to the trustee for her to pay creditors included in the bankruptcy.
- Making your first plan payment builds credibility with the court that you’ll be able to make your bankruptcy monthly payments throughout the term length and receive a discharge of any remaining unsecured debts at the end of your bankruptcy.
If you are considering filing for bankruptcy, give us a call at 210-340-8877 today for a free consultation to find out if filing would be right for you!
Note about Secured Debts
Generally speaking, a secured debt exists when a creditor has a right to sell an asset if you do not repay the debt. The most common example of secured debt would be a loan for a house or a car. Secured debts for items you want to keep are rarely, if ever, wiped away. You can catch up on missed payments, or continue paying for your home or car while you are in bankruptcy, but if you cannot stay current on your payments after the date of filing your bankruptcy, the creditor may take action to repossess the property once again.