Bankruptcy and General Practice

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Considering filing for bankruptcy? Get organized first.

Bankruptcy is a powerful tool designed to make sure people are not ruined by mountains of debt. Many, if not all, of your bills can be discharged in chapter 7 bankruptcy, which means that you legally will not have to pay them back. Recognizing that this can be hard on your creditors, lawmakers have taken steps to make sure that bankruptcy laws aren’t being abused.

In short, there’s a lot of papers you’re going to need to get organized before you can file for bankruptcy. Here’s a brief list of things your attorney is going to ask you (and your spouse, even if you’re not both filing) for when you’re ready to start the process:

  • Pay stubs. You’re going to need every single pay stub you’ve received in the past six months, no exceptions. The very first step in filing for bankruptcy is the means test to determine if you’re eligible for chapter 7 (through which debts can be discharged) or must instead file under chapter 13 (which involves setting up a payment plan). If you haven’t worked in that time there are ways around that, but otherwise you’re going to need those pay stubs.
    In fact, keep saving every stub you get, because the trustee is going to want to see pay stubs right through the date of filing.

  • Business income. If you’re self-employed, the trustee is going to want to see a profit-and-loss statement (income, expenses, and net profits) for the past six months.

  • Tax returns. You’ll need full copies for the past two years.

  • Bank statements. Statements for the past two months are needed for all accounts. Printouts from the bank’s site don’t count, nor do stacks of transaction receipts.

  • Mortgage statement and deed. A recent statement showing how much you pay each month and how much is owed on the house, plus a copy of the deed.

  • Home value. The trustee needs to know how much your home is worth, as well as how much you owe. This means getting a broker’s price opinion or an appraisal. There are online services that provide a ballpark figure, but so far very few judges are willing to accept that as proof of a home’s value.

  • Vehicle documents. You’ll need the title certificate for each car you own, and if you owe money on any of them you’ll also need a recent statement showing how much you owe and what you’re supposed to pay each month.

  • Retirement accounts. If you receive or are vested in a pension, have an IRA or 401(k) or any kind of deferred compensation plan, lay your hands on the most recent statement.

  • Your bills. To whom do you owe money? Gather your credit card statements, medical bills, personal and student loans, bank loans, and any other proof that someone is expecting money from you.

  • Court papers. If you’ve been served with any kind of papers relating to money you owe, including foreclosure papers, you’re going to need those, too. This includes judgments against you, child support and alimony orders, and proof that your wages are being garnished.

If there is something on this list which you don’t know how to find, give us a call and we will do our best to help you obtain it. Not every document is necessary for every case, and we may be able to identify a suitable replacement or a different form of documentation. The amount of paper required can feel frustrating or even overwhelming, but if you take some time to prepare ahead then you’ll be through this phase in short order. Don’t let fear of some paperwork stop you from asking for bankruptcy protection, because it’s your right.

Image credit: Damian Gadal, used under the CC BY 2.0 license.