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Preparing for Bankruptcy: What to Expect and How to Get Started

Filing for bankruptcy is a significant decision that can provide relief from overwhelming debt, but it also requires careful preparation and understanding of the process.

This article will guide you through the initial steps of filing for bankruptcy, covering essential topics such as gathering financial documents, fulfilling credit counseling requirements, and selecting a bankruptcy attorney.

Throughout this guide, we’ll emphasize the importance of legal representation in navigating this complex process.

Understanding Bankruptcy

Before diving into the preparation process, it’s crucial to understand what bankruptcy entails. Bankruptcy is a legal procedure that can help individuals or businesses eliminate or repay their debts under the protection of the bankruptcy court.

The two most common types of personal bankruptcy are Chapter 7 (liquidation) and Chapter 13 (reorganization).

An experienced bankruptcy attorney can help you determine which type of bankruptcy is most appropriate for your situation. They will consider factors such as your income, assets, debts, and financial goals to guide you towards the best course of action.

Step 1: Gather Your Financial Documents

The first step in preparing for bankruptcy is to collect all relevant financial documents. This process can be time-consuming, but it’s essential for accurately presenting your financial situation to the court. Here’s a list of documents you’ll need to gather:

  1. Income documentation: Pay stubs, tax returns, and profit/loss statements for the past two years
  2. Asset information: Bank statements, investment accounts, real estate deeds, vehicle titles
  3. Debt records: Credit card statements, medical bills, personal loans, mortgages, car loans
  4. Expense records: Utility bills, rent/mortgage payments, insurance premiums, groceries, transportation costs
  5. Legal documents: Divorce decrees, child support orders, lawsuits, judgments

An attorney can help you ensure you’ve gathered all necessary documents and can guide you on how to obtain any missing information. They can also assist in organizing these documents in a way that clearly presents your financial situation to the court.


preparing for bankruptcy


Step 2: Complete Credit Counseling

Before you can file for bankruptcy, you must complete a credit counseling course from an approved provider. This requirement is designed to ensure that you’ve explored all alternatives to bankruptcy and understand the implications of filing.

The course typically takes about 60-90 minutes and can be completed online, over the phone, or in person. After completion, you’ll receive a certificate that must be filed with your bankruptcy petition.

Your bankruptcy attorney can recommend approved credit counseling agencies and help you understand how this requirement fits into the overall bankruptcy process.

Step 3: Choose a Bankruptcy Attorney

While it’s possible to file for bankruptcy without legal representation (known as filing “pro se”), it’s strongly advised to hire an experienced bankruptcy attorney.

The bankruptcy process is complex, and mistakes can have serious consequences, including case dismissal or even accusations of fraud.

Here are some key factors to consider when choosing a bankruptcy attorney:

  • Specialization: Look for an attorney who specializes in bankruptcy law. They’ll have in-depth knowledge of the latest laws and local court procedures.
  • Experience: Consider how long the attorney has been practicing bankruptcy law and how many cases they’ve handled.
  • Local knowledge: An attorney familiar with local courts and trustees can be advantageous.
  • Communication style: Choose an attorney who explains things clearly and makes you feel comfortable.
  • References and reviews: Ask for references from past clients and check online reviews.
  • Fee structure: Understand their fees and payment options upfront.

Remember, most bankruptcy attorneys offer free initial consultations. Use this opportunity to ask questions and assess whether they’re a good fit for your case.

Step 4: Develop a Financial Plan

With your attorney’s guidance, start developing a financial plan. This plan should address your current debts and outline how you’ll manage your finances post-bankruptcy. Your attorney can help you:

  • Identify which debts are dischargeable in bankruptcy
  • Understand which assets you may be able to keep through exemptions
  • Develop a budget for living expenses during and after bankruptcy
  • Plan for rebuilding your credit after bankruptcy

This financial planning stage is crucial for ensuring that bankruptcy provides the fresh start it’s intended to offer.


develop a financial plan when preparing for bankruptcy


Step 5: Prepare for the Means Test

If you’re considering Chapter 7 bankruptcy, you’ll need to pass the means test. This test compares your income to the median income in your state to determine if you qualify for Chapter 7.

Your attorney can help you complete the means test accurately. If you don’t qualify for Chapter 7, they can advise you on other options, such as Chapter 13 bankruptcy.

Step 6: Stop Using Credit Cards

Once you’ve decided to file for bankruptcy, it’s crucial to stop using your credit cards. Continuing to use credit when you know you’ll be filing for bankruptcy could be seen as fraud by the court.

Your attorney can advise you on how to manage your finances in the period leading up to your bankruptcy filing.

Step 7: Understand the Automatic Stay

When you file for bankruptcy, an automatic stay goes into effect. This stay halts most collection activities, including foreclosures, repossessions, and wage garnishments.

Your attorney can explain how the automatic stay will affect your specific situation and can handle any creditors who violate the stay.

Step 8: Prepare for the 341 Meeting

After filing, you’ll need to attend a 341 meeting of creditors. Your attorney will prepare you for this meeting, where you’ll answer questions under oath about your financial situation.

Having an attorney present at this meeting can be invaluable. They can help you understand what to expect, prepare your responses, and address any issues that arise.

In Conclusion

Preparing for bankruptcy requires careful planning and attention to detail. While the process may seem overwhelming, remember that you don’t have to navigate it alone. An experienced bankruptcy attorney can guide you through each step, ensuring that you understand your rights and obligations, and helping you achieve the best possible outcome.

By gathering your financial documents, completing credit counseling, choosing the right attorney, and understanding the bankruptcy process, you’ll be well-prepared to start your journey towards financial recovery.

Remember, bankruptcy is designed to give you a fresh start. With proper preparation and expert guidance, you can use this tool effectively to regain control of your financial future.

Where Can I Find Help?

Dealing with bankruptcy doesn’t have to be a single-person job. The bankruptcy lawyers at Parker & DuFresne will help you determine the best course of action to help you get out from under your debt and move forward to a debt-free future.

Call today at 904-733-7766 for a free consultation, or click the button at the top of the page to schedule online.


Florida Bankruptcy Lawyers

Parker and DuFresne

Parker and DuFresne