Bankruptcy petitioners are often shocked by how quickly the process can move. Fortunately, the process doesn't go into overdrive until you submit your case to the court. That means bankruptcy attorneys want their clients to have as much sorted out as possible before they sign and send the papers.
It's wise to have a checklist to work from. Follow this guide to ensure you'll build a thorough checklist.
Income
Whether you're looking to restructure or liquidate your debts, the court is going to want to know the state of your finances. Ideally, you want to have at least your last two years' worth of federal taxes. Anyone who doesn't have those forms ready even though they filed them can contact the IRS for instructions on how to get copies.
If you didn't file, try to have other proof of your financial situation. For example, someone on Social Security or unemployment insurance can present statements from the government to attest to their circumstances. Whatever your situation is, try to find paperwork explaining it.
Folks who have recently been through a change in their work situation should document that change. If you were fired or laid off, present documents showing it. Someone who had their hours or wages reduced should produce payslips showing the changes. A couple of months would be ideal, but provide whatever you can.
Debts
This is the point of bankruptcy. Document every debt you're seeking to restructure or liquidate. If necessary, contact the creditors and get the exact names of their companies and any necessary information. Ask for amounts, but don't engage in discussions of paying the debts. Tell them you just need to know what you owe.
Get these details right, especially the ones regarding the names of your creditors. If you don't accurately list a creditor, the court won't enter a stay against their collection actions. That means the creditor will be allowed to pursue the debt even after a successful bankruptcy because they weren't a party to it.
Break up the debts by types, too. The important part is identifying secured versus unsecured debts. A secured debt is backed by a real asset, such as a car for an auto loan or a house for a mortgage. Unsecured debt is backed merely by faith and credit, usually meaning credit cards. You can restructure secured debts, but you can't discharge them in Chapter 7.
For more information, reach out to a bankruptcy attorney.
