1. Overwhelmed about how to file bankruptcy? If so,
you are not alone. The Bankruptcy Abuse
Prevention and Consumer Protection Act (BAPCPA)
was enacted by Congress in 2005 to reduce the
number of bankruptcies filed by individuals
attempting to write-off credit card debt. Instead of
allowing debtors to file Chapter 7, BAPCPA requires
all debtors to repay a portion of debts through
Chapter 13 payments.
How to File Bankruptcy
2. Understanding BAPCPA requirements of how to file bankruptcy
requires the assistance of a bankruptcy attorney Although there is
no law requiring debtors to retain a lawyer, few individuals are
capable of adhering to the stringent criteria of BAPCPA without legal
assistance Debtors who attempt to undergo the process alone could
place themselves at risk for having their bankruptcy petition denied
The first step of filing for bankruptcy protection involves determining
which bankruptcy chapter best suits the debtor
3. There are six bankruptcy chapters including: Chapter 7, 9, 11, 12,
13 and 15 Chapters 7 and 13 are established for individual debtors
while the remaining four chapters are set aside for business owners
and corporate entities Chapter 7 is also known as 'liquidation'
bankruptcy Debtors must liquidate assets to repay creditors
4. Not all debts can be discharged through bankruptcy proceedings
Excluded debts include: delinquent taxes, outstanding child support,
pending lawsuits, How to File Bankruptcy and federal student loans
Chapter 13 is known as 'reorganization' bankruptcy because debtors
are required to reorganize debts and establish a payment plan
Chapter 13 payments typically extend for two to three years
5. Debtors are required to submit payments to the bankruptcy Trustee
who in turn distributes payments to creditors In order to comply with
BAPCPA regulations, debtors must submit to the 'means' test which
is a financial calculator that compares debtors' income to their states'
median income level When debtors' income exceeds median
income they are required to file Chapter 13 If debtors' income falls
below median income they might be allowed to file for protection
under Chapter 7
6. The new bankruptcy laws also require debtors to obtain credit
counseling through an agency approved by the U S Trustee Credit
counseling must take place no more than six months prior to
submitting the bankruptcy petition
7. Debtors receive a certificate once counseling is satisfactorily
completed, which must be presented to the bankruptcy judge Most
people that file for must file Chapter 13 and develop a repayment
plan It is important to note that debtors are prohibited from incurring
new debts during the repayment period
8. If debtors encounter an emergency situation which requires them to
take out a loan, they must obtain permission from the court
Additionally, a large percentage of disposable income must be used
to repay outstanding debts Chapter 13 payments can place serious
financial restrictions on debtors and often cause debtors to fail out of
bankruptcy
9. If debtors are unable to adhere to their payment plan, creditors can
petition the court seeking dismissal of bankruptcy When bankruptcy
petitions are dismissed, debtors lose protection from the court and
creditors can commence with collection actions Debtors can locate
information via the Department of Justice website at usdoj
10. gov Visitors can download bankruptcy forms and locate helpful
resources including approved debt education and credit counseling
agencies
