Begin filing your own bankruptcy with this brief introduction to the bankruptcy filing process!

Up 2. Bankruptcy law: a general overview

Bankruptcy law provides for the development of a plan by debtors, who are unable to pay their creditors, to resolve their debts through the division of assets among creditors.

This supervised division also allows the interests of all creditors to be treated with some measure of equality. Certain bankruptcy proceedings allow debtors to stay in business and use revenue generated to resolve their debts.

An additional purpose of bankruptcy law is to allow certain debtors to free themselves (to be discharged) of the financial obligations they have accumulated, after their assets are distributed, even if their debts have not been paid in full.

Bankruptcy law is federal statutory law contained in Title 11 of the United States Code. Congress passed the Bankruptcy Code under its Constitutional grant of authority to "establish. . . uniform laws on the subject of Bankruptcy throughout the United States." See U.S. Constitution Article I, Section 8.

States may not regulate bankruptcy but they may pass laws that govern other aspects of the debtor-creditor relationship.

Bankruptcy proceedings are supervised by and litigated in the United States Bankruptcy Courts. These courts are a part of the District Courts of The United States. The United States Trustees were established by Congress to handle many of the supervisory and administrative duties of bankruptcy proceedings. Proceedings in bankruptcy courts are governed by the Bankruptcy Rules which were promulgated by the Supreme Court under the authority of Congress.

Although there are thirteen chapters in the official bankruptcy rule book, you only need to know about chapters 7, 11, 12, and 13 if you are filing a personal or business bankruptcy.

Up 3. Two types of bankruptcy

Liquidation: Chapter 7 bankruptcy is called liquidation and is the most common type of bankruptcy. It involves the appointment of a trustee who collects the non-exempt property of the debtor, sells it and, then distributes the proceeds to the creditors.

Rehabilitation: Chapters 11, 12, and 13 are called rehabilitation because the debtor is allowed to use future earnings to pay off creditors. Under these chapters, a trustee is appointed to supervise the assets of the debtor.

General Notes:

1. Bankruptcy proceedings can either be voluntary by a debtor or involuntary (initiated by creditors).

2. Once a bankruptcy is filed, creditors, for the most part, may not seek to collect their debts outside of the proceeding.

3. The debtor is not allowed to transfer property that has been declared part of the estate subject to proceedings.

4. Certain pre-proceeding transfers of property, secured interests, and liens may be delayed or invalidated. (For instance, transferring ownership of your vehicle to avoid losing it)

5. Various provisions of the Bankruptcy Code also establish which creditors will be paid first.

Up 4. Bankruptcy General Procedures

A fundamental goal of bankruptcy law, is to give debtors a financial “fresh start” from burdensome debts. The Supreme Court made this point about the purpose of the bankruptcy law in a 1934 decision.

"bankruptcy gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt."

The bankruptcy process is governed by the Federal Rules of Bankruptcy Procedure (often called the “Bankruptcy Rules”) and local rules of bankruptcy.

There is a set of official forms for use in bankruptcy chapter along with state-specific forms.

There are 90 bankruptcy districts across the country with each state having one or more districts. State Bankruptcy Districts

The court official with decision-making power over federal bankruptcy cases is the United States bankruptcy judge, a judicial officer of the United States district court.

The bankruptcy judge decides any matter connected with a bankruptcy case, such as eligibility to file or whether a debtor should receive a discharge of debts.

Much of the bankruptcy process is administrative but conducted away from the courthouse in a court clerk’s office. Your involvement with the bankruptcy judge will usually be very limited. In most chapter 7, 12 and 13 cases, (and some 11) the court-appointed Trustee carries out the administrative process.

Chapter 7 debtors typically do not appear in court nor see the bankruptcy judge unless an objection is raised in the case.

Chapter 13 debtors usually only appear before the bankruptcy judge at the "repayment plan confirmation hearing".

The only formal proceeding that you must appear is the meeting of creditors, informally called a “341 meeting” which is usually held at the offices of the United States trustee.

Section 341 of the Bankruptcy Code requires that the debtor attend this meeting so that creditors (at least those that show up) can question the debtor about debts and property.

Up 5. Types of Bankruptcy

There are five types of bankruptcy (called chapters) and each chapter is covered more in-depth elsewhere on this site. But, for now here is a quick overview . . .

Up Chapter 7 Bankruptcy

Officially called "Liquidation", it's an orderly, court-supervised procedure by which a trustee collects your assets and reduces them to cash, and then distributes the proceeds to creditors, subject to your right to retain certain exempt property and the rights of secured creditors.

Because there is usually little or no nonexempt property in most chapter 7 cases, there may not be an actual liquidation of your assets.

Chapter 7 cases are also called “no-asset cases” because creditors holding an unsecured claim will only get a distribution from the bankruptcy estate if there are any assets left after all secured creditors are satisfied and the creditors filed a proof of claim with the bankruptcy court.

In most chapter 7 cases, you'll receive a " discharge" that releases you from personal liability for certain dischargeable debts. The discharge normally happens within 90 days after you file your bankruptcy petition.

Up Chapter 9 Bankruptcy

Officially called "Adjustment of Debts of a Municipality", it provides for reorganization, much like chapter 11.

Only a “municipality” such as cities and towns, villages, counties, taxing districts, municipal utilities, and school districts may file under chapter 9.

Note: Because of the nature of this chapter it is not covered on this site!

Up Chapter 11 Bankruptcy

Officially called "Reorganization", it is ordinarily used by commercial enterprises that desire to continue operating a business and repay creditors concurrently through a court-approved plan of reorganization.

Under chapter 11, you have the exclusive right to file a plan of reorganization for the first 120 days after the order for relief and must provide creditors with a disclosure statement containing information adequate to enable creditors to evaluate the plan. The court ultimately approves (confirms) or disapproves your plan of reorganization.

Under the confirmed plan, you can reduce your debts by repaying a portion of your obligations and discharging others. You can also terminate burdensome contracts and leases, recover assets, and re-scale your operations in order to return to profitability.

Note: Under chapter 11, it's expected that you'll go through a period of consolidation and emerge with a reduced debt load and a reorganized business.

Up Chapter 12 Bankruptcy

Officially Called "Adjustment of Debts of a Family Farmer with Regular Annual Income".

The process is very similar to that of chapter 13 (see below) under which the farmer proposes a plan to repay debts over a period of time; no more than three years unless the court approves a longer period, but to exceed five years.

The court appoints a trustee with duties very similar to those outlined in chapter 13 below and you are allowed to operate the farm while the Chapter 12 plan is being carried out.

Up Chapter 13 Bankruptcy

Officially called "Adjustment of Debts of an Individual With Regular Income", it is designed for an individual debtor who has a regular source of income.

At a confirmation hearing, the court either approves or disapproves your repayment plan depending on whether or not your plan meets the code’s requirements for confirmation. chapter 13 more info

Note 1:You usually keep most of your possessions by making payments to creditors, through the trustee, based on your anticipated income over the life of the repayment plan.

Note 2: You must complete all of your plan's payments before the discharge is received. Also, you are protected from lawsuits, garnishments, and other creditor action while your plan is in effect.

Note 3: Chapter 13 is often preferable to chapter 7 because it enables you to keep a valuable asset, such as a house or land. It is also favored because it allows you to propose a “plan” to repay creditors over time; usually three to five years.

Note 4: The chapter 13 discharge is also considerably broader (i.e., more debts are eliminated) than a chapter 7 discharge.

Up 11. File Bankruptcy Yourself - Three Easy Steps

If you cannot afford a lawyer and are not comfortable filling out your own forms, and you prefer not to learn another software program, then using an on-line preparation service such as bankruptcyformprocessing.com is your best alternative. They offer 3 easy steps that prepare you for filing your own bankruptcy petition.

Step 1: Submit your information via their on-line secure server or use mail or fax (your choice).

Step 2: They prepare your bankruptcy paperwork. Your petition will include:

• All Schedules;
• All Summary of Schedules;
• Statement of Financial Affairs;
• Mailing matrix; and
• All required declarations and verifications in accordance with the rules of State and local bankruptcy court.

After preparing your bankruptcy petition, they forward the original documents to you (depending on your choice) by Priority Mail, Express Mail; FAX or electronically (via a secure Internet download).

Step 3: This is the easy part, just print and sign the original set of the documents in the places indicated on the forms and then make the number of copies required by your local bankruptcy court (all necessary contact telephone information and mailing addresses are included with your petition) and finally submit the petition to the court along with your filing fees. It's really that simple!

If you're unemployed, facing wage garnishment or you just can't pay your bills then filing bankruptcy may be your best option. With expert help you can file your own bankruptcy for a fraction of what a lawyer charges. Consider using the online services of bankruptcyformprocessing.com. Their experts do all the work, NO office visits required; 100% on-line preparation! Review their services here!

Up 12. Additional financial help and services . . .

Fair Debt Collection Practices Act
Having trouble with debt collectors or creditors?
This site offers a wealth of free tools, tips and advice to help you deal with harassing phone calls from debt collectors plus free sample debt and credit dispute letters with instructions.

Fair Credit Reporting
Need to fix or repair your credit?
This site offers free sample credit dispute letters and instructions for disputing items in your credit reports with advice on how to repair your own credit for free.

Stopping Bank Foreclosure
Are you in danger of losing your home to foreclosure?
This site offers several options for saving your home and shows how to stop bank foreclosures with free workout plans.

Debt-n-Loan Consolidation.com
Offers information and access to to non profit debt consolidation services that can reduce monthly credit card debt by up to 60 percent. Get your FREE 2-minute debt relief analysis here!

Child Support Collection Laws
Are you owed back child support payments? Are you wondering what your rights are concerning paying child support?
This site provides the rules for every state as well as the military rules for collecting child support. Visit today and learn how you can obtain back support payments with interest!

Student Loan Consolidation Info
Do you have a student loan in default? If so, visit this site to learn about your rights and options to resolve your defaulted student loan situation.

Small Claims Court Info
Offers step-by-step instructions for suing or defending a case in small claims court. Includes free forms.

If you have questions that this site does not answer, you can review the actual bankruptcy code and recent decisions using the info below to copy and paste into your browser.

• http://www2.law.cornell.edu/cgi-bin/foliocgi.exe/frb?
• http://www4.law.cornell.edu/cgi-bin/empower?DB=SupctSyllabi&TOPDOC=0&QUERY00=bankruptcy&PROP00=t=b

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