Credit Counseling Pre-Filing Briefing and Other Information Required to File Bankruptcy
Filing for bankruptcy is a stressful, expensive, complicated, and potentially long process. Even the shorter side of filing for bankruptcy can take up to four months. The best way to make sure that your bankruptcy filing goes through as quickly and smoothly as possible is to gather all of the proper documents beforehand.
Studying up and being prepared for what you’ll need to file for bankruptcy will help to clear some of the stress that comes with the procedure. It will also prevent as many unexpected requirements and obligations being thrown at you since you’ll have a better idea of what the court will ask for.
The First Steps
There are two methods by which you can file for bankruptcy, Chapter 7 and Chapter 13. Chapter 7 is a much shorter process and is used in cases where the court doesn’t believe you’ll be able to pay back the debts you owe. So instead of forcing you to pay them back, they clear the debts from your name (there are some kinds of debt that cannot be cleared, however).
Chapter 13 is just the opposite. If the court thinks that you have enough disposable income to pay back your debts, they will work with you and your creditors to establish a payment plan for paying back these debts. This method can take anywhere from 3-5 years to reach completion.
Regardless of which method of bankruptcy you are filing for, the paperwork required will be much the same. There are a few variations, but they’re relatively small.
When you first begin filling out the paperwork for bankruptcy, you will be asked to provide some standard information regarding your income, expenses, assets, debt, and other financial affairs. This is so that the court has an accurate idea of your financial situation, which allows them to make a more informed decision on how your debt will be handled. It’s important that you also show this information to your attorney so that they can assess how to best approach your case and walk you through the proper steps of filing for bankruptcy.
Below, we’ll cover some of the documents you’ll need to have available for filing for bankruptcy.
Credit Counseling Certificate
Before you are allowed to file for bankruptcy, the law requires that you take a course in credit counseling. This is the course that CC Advising provides on our web site. Similar to taking a driver’s safety course after receiving a traffic ticket, this is to ensure that you are aware of the ins and outs of the situation so that you can navigate it from an informed perspective and hopefully avoid the situation in the future. Most of these courses can be done online and completed within about an hour’s time. Once you have taken one and passed, your attorney will need to provide your passing certificate to your trustee. CC Advising will send it directly to your attorney to make it easy.
Personal ID Information
This information is used to identify you and build a short history of your life over the past several years. They will need to see the basics, like a driver’s license with a photo, proof of address, and your Social Security Number. You will also be asked to provide the names of any children you might have, your spouse, the names and addresses of past and present employers, and any other names you might have used in the past 8 years. You’ll need this information during the filing process and also for when you are speaking to your trustee.
You’ll also need to provide tax return information for the past couple of years. How many years back of tax returns you will need to provide is determined by which kind of bankruptcy you are filing for. If you are filing for Chapter 7 bankruptcy, then you only need to provide tax returns from the last two years. If you are filing for Chapter 13 bankruptcy, then it is the past four years.
If for some reason you have unfiled returns over that time period, you will need to provide some explanation for this to the court. You can do so via a simple letter included in your filed documents providing them with a reason. If you don’t have a good reason for not filing, your trustee will require that you file before your case is heard. Once you’ve caught up on your unfiled taxes, your case will be able to proceed.
You’ll need documentation of your income for the past two years. The documents you provide need to include all of your earnings over that period of time. Your tax returns will include some of the necessary information, but you’ll still need documents like pay stubs and a statement from each of your employers confirming that the information you are providing is accurate. This information, along with your tax returns, needs to be submitted 60 days before you actually file to the court, so don’t hesitate on gathering this information and your tax returns.
If you’re employed at a standard job, you’ll be asked to provide two pay stubs for the 6 month period preceding your bankruptcy filing. You’ll also need your last two W-2’s and other sources that prove your income like rental properties or Social Security funds.
If you’re self-employed then the paperwork is a little different. You’ll need to provide a profit and loss document for the full two years prior to filing. You might also have to present business bank statements to verify that the profit and loss documents you provide are accurate.
Debts and Expenses
You also need to provide the information regarding all of your debts. Even if you’re filing for Chapter 7 bankruptcy, and hope to expunge a lot of these debts, it is still required that you submit information pertaining to them. For every debt that you owe you need to provide the court with your creditor’s name and contact information, an account number, and an amount that specifies what you still owe to the creditor.
All of your current monthly expenses will need to be provided as well. This includes bills, house, and car payments, insurance, utilities, groceries, gas, etc. Anything that you have to pay in a month’s time needs to be accounted for. Once you have figured this amount out, you will need to include any annual expenses. This includes costs that you will pay once or just a few times a year, like vehicle maintenance, travel expenses, property taxes, school expenses, etc.
To calculate these costs, go through your monthly bills and transactions for the past few months and develop an average for each category. Generally, the court won’t need your bills and transactions to verify the amounts, unless they are unusually high. If they decide that they are too high, you might end up having to also work through a bankruptcy audit.
If you own any real estate properties, these will need to be accounted for. The court will accept what they consider to be proof of your real estate’s fair market value. Depending on what district you’re in, what they consider to be proof might be different. Some methods for appraising your real estate that the court might accept are a broker’s opinion, online appraisal, or a full appraisal. Talk to your attorney to figure out which of these documents your local court is looking for.
You could also be asked to provide statements showing your mortgage, current loan balance, and payment amounts. Some districts also require that you present the deed to your estate and a document providing proof of home insurance.
If you own any vehicles you’ll need to provide some proof of their value to the court. Talk to your attorney and find out what kind of form they’ll accept for this. Generally, an online printout can be easily obtained and used to verify its value.
You’ll also need to provide a recent statement of any car loans you currently have taken out. This statement should have information showing how much the loan is for, what you still owe and how much you’re making in monthly payments on it. Depending on what your trustee asks for, you might also need to have proof of registration and insurance on the vehicles.
During the filing process, you will need to provide forms that assess the value of everything you own. This includes not only your real estate and vehicles, but every single item you own. This doesn’t necessarily mean that you will need to create a list of all of these individual items in your household. You are allowed to lump certain kinds of items together to make the process simpler. This includes things like jewelry, books, appliances, furniture, wardrobe, etc.
To determine what all of these items are worth, you will use their replacement cost. This means that rather than listing what it was worth when it was originally purchased, you will give an estimate of its current value. Factors like the age of the item and its condition need to be considered as well.
Other assets that the court will need to be documented include your bank account(s), 401K, cash on hand, and anything else that contributes to your overall net worth. These numbers are likely to change over the course of your bankruptcy filing, and that’s ok. The goal is to provide the court with as accurate an idea of your worth at the time of filing as possible, and they are understanding of the fact that it will change slightly as the process goes on.
Along with all of this other information, you will be asked to fill out paperwork for your bankruptcy. Most of the information you’ll need to fill out these forms will be found in the sources previously mentioned. Use the information that you have gathered regarding your income, asset and property values, debts, and tax returns to calculate and complete your bankruptcy forms. This will not only make the process of completing these forms easier, but it will make sure that all of your information is unified and accurate.
Once you have completed all areas of your bankruptcy petition that you can with the information you have already gathered, you can start working on the missing portions of the form. This includes information regarding any co-debtors (like a spouse), your creditor, and information about pending or current lawsuits. The best way to find these pieces of information is through associated loan statements and bills.
If you retain a bankruptcy attorney to represent you, they will handle all of the bankruptcy forms for you. Bankruptcy is a very difficult process and it is always recommended that you seek competent counsel to assist you. Their knowledge and expertise can help protect your property and your interests, and may even save you more money in the long run.
Lastly, any expenses or obligations that are affecting your bankruptcy will need to be provided as well. This includes things like alimony, child support, or other atypical expenses. If you have any expenses like this that need to be shown, a monthly statement or bill should be acceptable to the court. If you’ve recently been divorced, having a document showing proof of marriage settlement or any court orders might need to be shown in court.
The court has provisions in place to protect you in case you’ve lost any required paperwork during the event of a natural disaster. If a debtor loses essential financial paperwork during the course of a natural disaster, your bankruptcy trustee will not be able to take any actions against you for it. They also will have to grant reasonable accommodations to ease the process of bankruptcy for you. Also, if your income is affected by a natural disaster, this will be factored into your bankruptcy plan, and adjustments will take place to account for the change.
While bankruptcy is a stressful and uncomfortable ordeal, you can make the process easier on yourself by preparing all of the necessary information. Not only do you need to provide all information regarding your current assets and income, but also circumstances like lawsuits and divorce that may have happened recently or are beginning to take place.
These will have a significant impact on your finances. Make sure that you communicate thoroughly and frequently with your attorney so that you can make it to the end of the process as smoothly and quickly as possible.
Remember, the above is just a basic overview. Once you retain a bankruptcy attorney, they will provide you with a full list of all of the documents you need to obtain. The key is to be truthful and honest, and to disclose everything. Clients who try to hide assets from their attorney often end up in serious trouble.
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