Deciding to file for bankruptcy isn’t easy. It’s a decision that often comes after months—or even years—of stress, sleepless nights, and trying everything you can to stay afloat. Whether it’s mounting credit card debt, medical bills, or unexpected life changes that brought you here, you’re not alone. Thousands of people file for bankruptcy every year, and for many, it’s the first step toward a fresh start.
Once you’ve made the decision, it might seem like the hardest part is over. And in some ways, that’s true. But bankruptcy isn’t just about deciding to file—it’s about filing the right way. While it’s legal to file without a lawyer, remember that bankruptcy is a federal legal process full of rules, forms, and deadlines. Even a small mistake can lead to delays, dismissed cases, or worse, losing assets you could’ve protected.
This guide will walk you through the basic steps of filing for bankruptcy. Whether you’re thinking of tackling it yourself or hiring an experienced bankruptcy lawyer, you’ll learn what to expect—and why going it alone can be riskier than it seems.
Choosing the Right Type of Bankruptcy
Before you start gathering paperwork or filling out forms, you need to figure out which type of bankruptcy fits your situation. Most people filing for personal bankruptcy choose between Chapter 7 and Chapter 13. Each has its own rules, benefits, and downsides, and picking the wrong one can create more problems than it solves.
Chapter 7 Bankruptcy: Liquidation
Chapter 7 is the most common form of bankruptcy. It’s designed for people who don’t have a lot of disposable income and need to wipe out unsecured debts like credit cards, medical bills, and personal loans. If you qualify, Chapter 7 can discharge most of your debts in a few months.
But there’s a catch. In Chapter 7, a bankruptcy trustee can sell off your non-exempt assets—things like extra cars, valuable collectibles, or property you don’t need for daily living—to pay your creditors. Each state has its own list of exemptions that protect certain property, like your primary residence or basic household items. Still, if you have significant assets you want to keep, Chapter 7 might not be the best choice.
To qualify for Chapter 7, you’ll need to pass the means test, which compares your income to the median income in your state. If your income is too high, you might be pushed into filing Chapter 13 instead.
Chapter 13 Bankruptcy: Repayment Plan
Chapter 13 works differently. Instead of wiping out your debts quickly, it sets you up on a 3- to 5-year repayment plan. You’ll pay back a portion of what you owe based on your income, with the rest of your qualifying debts discharged at the end of the plan.
The big advantage of Chapter 13 is that it lets you keep your property—even if you’re behind on mortgage or car payments. This makes it a good option if you have steady income and want to catch up on secured debts (like a mortgage) while keeping your assets.
Chapter 13 can also help if you have debts that aren’t dischargeable in Chapter 7, like certain taxes, child support, or student loans. But it’s more complicated, takes longer, and requires strict budgeting to keep up with your payment plan.
How to Decide?
Choosing the right type of bankruptcy depends on several factors:
- Your income: If you don’t pass the means test for Chapter 7, Chapter 13 might be your only option.
- Your assets: If you have property you want to protect, Chapter 13 might offer more flexibility.
- Your debts: Some debts, like student loans or recent taxes, won’t be wiped out in bankruptcy, but Chapter 13 might help you manage them.
- Your financial goals: Are you looking for a quick fresh start, or do you need time to catch up on secured debts?
Deciding which chapter to file under isn’t always straightforward. Even some lawyers specialize in one type of bankruptcy over the other because the rules are complex. If you’re unsure which option is best for you, talking to a bankruptcy attorney can save you from costly mistakes.
Documenting Your Situation
Bankruptcy is largely a game of disclosure. To draft your court documents, you’ll be required to provide detailed information about your financial life, from your income and expenses to your assets, debts, and recent financial transactions. Missing or incorrect information can slow down your case, get it dismissed, or lead to unexpected consequences.
In general, you should expect to have the following:
- Assets: A list of everything you own, from your home and car to smaller items like electronics, jewelry, and furniture. Though the value of most household goods can be estimated, property such as real estate, investments, collectibles, and vehicles should be formally appraised.
- Bank Statements: Recent statements from all your bank accounts, including checking, savings, and investment accounts.
- Debts: A complete list of your debts, including credit cards, medical bills, personal loans, car loans, mortgages, and other liabilities. Include creditor names, balances, account numbers, and payment history.
- Income: Pay stubs from the past six months, tax returns for the last two years, and proof of income from all other sources, such as freelance work, rental income, or unemployment benefits.
- Monthly Expenses: A breakdown of your monthly household expenses, such as rent, utilities, groceries, insurance, transportation, and childcare.
- Legal Documents: Any lawsuits, judgments, or liens against you, as well as divorce decrees or child support obligations.
These aren’t the only documents you’ll need to complete your court documents, but they should allow you to begin drafting the petition, schedules, and related statements.
Remember, it’s important to stay organized when compiling documents and information. You’ll need to reference this information multiple times during the process, and being thorough now can prevent headaches later.
Draft Your Bankruptcy Petition, Schedules, and Statements
With your documents in order, you’re ready to prepare your bankruptcy petition. This is the official paperwork that kicks off your case and puts you “in the system.”
The main form is called the Voluntary Petition for Individuals Filing for Bankruptcy. But that’s just the start. You’ll also need to complete:
- Schedules A/B through J: Detailing your assets, liabilities, income, and expenses.
- Statement of Financial Affairs: Covering recent financial transactions, property transfers, and income history.
- Means Test: If filing Chapter 7, the means test determines whether you qualify based on your income. Chapter 13 filers also complete the means test to determine the amount they’ll be required to pay each month toward their repayment plan.
- Creditor Matrix: A list of all your creditors and their addresses.
While the forms might look straightforward, they can be deceptive. A simple mistake—like undervaluing an asset, misreporting income, or checking the wrong box—can lead to delays, a dismissed case, or even accusations of bankruptcy fraud. For these reasons, I usually spend hours drafting these court documents to ensure the case goes smoothly for my clients and there are no surprises.
If you’re filing on your own, take your time and double-check everything. Better yet, consider having a bankruptcy lawyer review your paperwork before you file.
Take Required Credit Counseling
Before officially filing for bankruptcy, the law requires you to complete a credit counseling session. This isn’t optional—it’s a mandatory first step for both Chapter 7 and Chapter 13 filers. The counseling must come from an agency approved by the U.S. Trustee Program, which oversees the bankruptcy process.
The session usually takes about 60 to 90 minutes and can be done online, over the phone, or in person. During the session, a counselor will review your financial situation, discuss alternatives to bankruptcy (like debt management plans), and help you understand what filing will mean for your future.
At the end of the session, you’ll receive a certificate of completion, which you’ll need to include with your bankruptcy paperwork. The certificate is valid for 180 days, so don’t wait too long to file after completing counseling.
You can find a list of approved credit counseling agencies on the U.S. Department of Justice website. Be wary of scams—only work with agencies on this list to ensure your certificate is valid.
File Your Petition with the Bankruptcy Court
Once you’ve completed your court documents and triple-checked to make sure everything is correct, it’s time to officially file your bankruptcy petition with the U.S. Bankruptcy Court. This is the moment when your case is formally opened, and creditors are legally barred from trying to collect on your debts thanks to something called the automatic stay.
But before you breathe a sigh of relief, there are a few important steps to get through.
Where and How to File
You’ll need to file your bankruptcy petition with the bankruptcy court that serves your area. Most courts accept filings in person, by mail, or electronically if you have legal representation. If you’re filing on your own (known as filing pro se), you’ll likely need to visit the court in person to submit your documents.
When you file, you’ll submit:
- Your completed petition and supporting documents (schedules, statements, etc.).
- Your credit counseling certificate.
- A creditor matrix listing all your creditors and their contact information.
- The filing fee, which is $338 for Chapter 7 cases and $313 for Chapter 13.
If you can’t afford to pay the fee upfront, you apply to pay in installments. And if your income is low enough, you may qualify for have the fee waived entirely.
You’ve Filed—Now What?
Once your petition is filed, you’ll get a case number and a trustee will be assigned to your case. The trustee is responsible for reviewing your paperwork, managing any asset sales (in Chapter 7), or overseeing your repayment plan (in Chapter 13).
Filing your petition feels like a big milestone—and it is—but it’s just the beginning of the process. There are more forms to file and deadlines to meet, so don’t lose momentum. Missing deadlines can result in your case being dismissed or delayed. It’s another area where having legal guidance can make a huge difference, ensuring nothing slips through the cracks.
Only the Beginning
Filing for bankruptcy is no small feat. It takes courage to face your financial situation head-on and take steps toward a fresh start. If you’ve made it this far, you’ve already tackled one of the hardest parts—making the decision and navigating the initial filing process.
But the journey isn’t over yet. After filing, you’ll need to attend a 341 meeting (also known as the meeting of creditors), where you’ll answer questions from the bankruptcy trustee about your finances and paperwork. You’ll also need to complete a second financial education course before your debts can be discharged.
While bankruptcy can feel overwhelming, it’s designed to give people a way out of unmanageable debt. Whether you’re filing on your own or with legal help, staying organized and informed is key. And if at any point the process feels too complex, don’t hesitate to consult a bankruptcy attorney. A little guidance can go a long way in protecting your assets and ensuring a smoother path to financial recovery.
Remember: bankruptcy isn’t the end of your financial story—it’s the beginning of a new chapter.
ABOUT THE AUTHOR
Meet Jay
Since I became a lawyer in 1995, I’ve represented people with problems involving student loans, consumer debts, mortgage foreclosures, collection abuse, and credit reports. Instead of gatekeeping my knowledge, I make as much of it available at no cost as possible on this site and my other social channels. I wrote every word on this site.
I’ve helped thousands of federal and private student loan borrowers lower their payments, negotiate settlements, get out of default and qualify for loan forgiveness programs. My practice includes defending student loan lawsuits filed by companies such as Navient and National Collegiate Student Loan Trust. In addition, I’ve represented thousands of individuals and families in Chapter 7 and Chapter 13 bankruptcy cases. I currently focus my law practice solely on student loan issues.
I played a central role in developing the Student Loan Law Workshop, where I helped to train over 350 lawyers on how to help people with student loan problems. I’ve spoken at events held by the National Association of Consumer Bankruptcy Attorneys, National Association of Consumer Advocates, and bar associations around the country. National news outlets regularly look to me for my insights on student loans and consumer debt issues.
I’m licensed to practice law in New York and California and advise federal student loan borrowers nationwide.
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