DIY Bankruptcy - How to file for bankruptcy on your own

You can file bankruptcy without an attorney, which is also called pro se bankruptcy. The term ‘pro se’ means without an attorney. Here’s how you can do it.

Pre-filing bankruptcy process - Steps you need to take

Step 1Go through the Notice to Consumer Debtors.

The notice gives you some key information like:

You can hire a bankruptcy attorney if you can afford it.
You should attend a credit counseling session 180 days before filing bankruptcy.
You have to complete a financial management course after filing bankruptcy.
Different types of bankruptcy available to consumers and business owners.
You have to speak the truth in your bankruptcy paperwork.
Hiding properties or making small false claims is a bankruptcy crime.
You can be imprisoned or fined for committing a bankruptcy fraud.

Step 2Check out your credit reports.

Get free copies of your credit reports from annualcreditreports.com.
Get copies of your Experian, Equifax, and Transunion credit reports.
Get copies of your credit reports either in the mail or online.

Step 3Calculate how much you owe and to whom.

1Check your credit report and make a list of your creditors and debt collectors.
2Ask your creditors or debt collectors to send you a written notice confirming the amount you owe to them.
3Ask secured creditors or debt collectors to mention the status of your accounts’ in the written statement.
4Send a letter to your creditors and debt collectors if you cannot contact them over the phone.
5For court judgments, request the court to issue a written statement mentioning the current balance.
6Collect the latest copies of the court order when you owe or alimony child support. Also, collect the latest statement from the child support collection agency.
7List all your debts accurately. Make sure you include even those debts that are not there in your credit report. So it is better to get the latest financial statement from your creditors or debt collectors.

Tips

Do not calculate your debt amount based on the information you get from your credit report only. Credit reports may not contain the latest information. Some creditors, like landlords, doctors, and utility companies do not report to the credit bureaus. So, it is best to calculate your debt amount based on the written statements you received from your creditors or debt collectors.

Make sure you list any loan that you have taken out from a friend or a family member.

Step 4Conduct the 'means' test.

Conduct the means test to know if you qualify for chapter 7 bankruptcy. You can get three forms to conduct this test. File 22A–1 form to report your monthly income for the last 6 months. The information in the form will determine your net monthly income and compare it with the state median income for households of the same size. If your income is below the state median income, you don't have to fill out the second form. The other forms that you may have to fill out are 22A-1 Supp and 22A-2.

Income calculation

Look at the various sources of your income to get the right figure.

Your paycheck

Previous year’s income tax return

Any amount you receive as alimony

Earned overtime pay and commissions

Compute your median income

State:

Size of household:

Average gross monthly income (Pre-tax) for last 6 months:

Your income ($) Joint debtor's income ($)

How to calculate your income

If you know your annual income, then you can divide it by 12 to get your average monthly income.

If you are paid every two weeks, then just double the amount of your paycheck.

Income and expenses

    
         Net income 
        
        You
        Your spouse
        Total amount
      
        Gross wage and commissions
        $
        $
        $
      
        Estimated overtime pay
        $
        $
        $
      
        Subtotal gross income
        $
        $
        $
      
        Payroll Deductions
Payroll tax and Social Security 
Insurance 
Union dues 
Pension contribution 
Repayments on a personal loan
Support payments deducted from the paycheck
Other payroll deductions 
Subtotal of payroll deductions
        $
        $
        $
      
        Take-Home Pay
Retirement income 
Gross income from rental properties 
Social Security and other government assistance 
Gross income from business 
Tax refund
        
        $
        $
        $
      
        Other income

Net income
Gross wage and commissions	$	$	$
Estimated overtime pay	$	$	$
Subtotal gross income	$	$	$
Payroll Deductions Payroll tax and Social Security Insurance Union dues Pension contribution Repayments on a personal loan Support payments deducted from the paycheck Other payroll deductions Subtotal of payroll deductions	$	$	$
Take-Home Pay Retirement income Gross income from rental properties Social Security and other government assistance Gross income from business Tax refund	$	$	$
Other income

Put your total monthly income and your annual income in the form. Make sure you do not change the figure just to match your W-2s or tax returns.
Mention the name of your state and the number of people in your household.
Find out the state median income of different household sizes.
Find and put down the state median income for a household of your size.
Acknowledge in the form that there is no presumption of abuse.
Put your signature and date in the form.

Important

Give details of your employment in the form:

Your job designation

Employer’s name and mailing address.

Your job tenure

Step 5Determine the type of bankruptcy you can file.

The means test will give you an idea of what type of bankruptcy you can file. What will happen if your income is above the state median income? You may still try to file for Chapter 7 bankruptcy, but the court is more likely to instruct you to file Chapter 13 bankruptcy.

Step 6Go through the counseling session.

Before you file for bankruptcy, make sure you attend a credit counseling program from a court-approved credit counseling agency. You can get a list of court approved credit counseling agencies from the Department of Justice itself. You can attend the counseling session online, in-person, or over the phone. You have to show the bankruptcy counseling certificate to the court. So make sure you collect it after attending the session.

Step 7File your income tax returns.

Before you file for bankruptcy, make sure you file your income tax returns. The bankruptcy court may not agree to discharge your debts unless you have filed your income tax returns.

Step 8Organize your financial documents.

Gather all the documents that you need to submit to the bankruptcy court and the trustee. Some of the documents that you may need are given below:

1Documents for a real estate property, which includes land. Submit copies of the mortgage, deed, and declaration of homestead.
2Copies of federal income tax returns.
3Documents for any boat or vehicle you purchased with an auto loan.
4Copies of your life insurance documents.
5Copies of your loan agreements, bank statements, credit card statements, and investment account statements.
6Copies of stocks and bonds that you own.
7Documents for any mobile home you own.
8Documents for retirement plans.
9Copies of loan applications you made in the last two years.
10Copies of your divorce decree received in the last two years.
11Copies for vehicle titles of trailers and motorized vehicles.
12Documents for vehicles that you own. Include documents for vehicles that you have sold, or that lenders have repossessed in the last four years.

What you should or shouldn’t do before filing bankruptcy

    
        Should 
        Shouldn’t
      
        Avoid getting married or divorced
        Take out a new loan
      
        Avoid selling precious assets
        Ignore lawsuits
      
        Avoid making a huge contribution to pension funds
        Contact creditors who have no idea of how to contact you
      
        Avoid leaving your job
        Transfer your property to protect it
      
        Read bankruptcy laws
        Try to sell your property

Should	Shouldn’t
Avoid getting married or divorced	Take out a new loan
Avoid selling precious assets	Ignore lawsuits
Avoid making a huge contribution to pension funds	Contact creditors who have no idea of how to contact you
Avoid leaving your job	Transfer your property to protect it
Read bankruptcy laws	Try to sell your property

Bankruptcy filing process - Steps you need to take

Congratulations! You have completed the pre-filing bankruptcy process. Now, you are ready to start the bankruptcy process.

Step 1: Complete your bankruptcy paperwork.

You have to fill out the required bankruptcy forms to the best of your knowledge and submit them to the court.

1 Income and Expenses -

We have already discussed income in the means test section. Now, let's talk about the average monthly expenses that you need to list in the Schedule J.

Expenses

Housing -Rent, home renovation, furniture purchases, property taxes, etc.
Utilities -Cable TV, water, and phone bills.
Food -Groceries and eating out.
Clothing -New clothes and laundry.
Medical -Medicines, doctors, eyeglasses, and others.
Transportation -Gasoline, public transportation, licensing, parking, maintenance, and others.
Debts -Credit cards, student loans, auto loans, and others.
Tax -Estimated tax payments, the tax you pay at the time of filing annual tax returns, back taxes, and others.
Entertainment -Gifts, cell phones, movies, sports events, Internet, events, pet expenses, vacations, etc.
Insurance -Auto, health, life, homeowners, and other insurance policies.
Personal items -Haircuts, beauty products, health club memberships, etc.
Vices -Gambling, tobacco, alcohol, etc.
Child support and alimony -Child support payments and alimony.
Children -Daily allowance, daycare, toys, gifts, tuition, any money you give to adult children, etc.
Education expenses -Supplies, books, tuition, etc.
Miscellaneous expenses -Charitable contributions.
Business expenses -Monthly expenses of owning and operating the rental property, monthly expenses for business, etc.

Note

The sum total of all your expenses in different categories will be your total expenses. Please do not include expenses that are deducted from your paycheck.

2 Assets

1 Real properties, timeshares, your home, and other real properties.
2 Motor vehicles you own.
3 Your checking account balance
4 Household goods like appliances, furniture, computer, audio, and video equipment, etc.
5 Jewelry
6 Cash value of life insurance
7 Stocks, bonds, and other investments
8 Firearms
9 Art objects
10 Items you have collected as a hobby
11 Interests in any trusts
12 Business interests
13 The money you are yet to receive as part of your alimony and support, bonuses, commissions, tax refunds, claims where you can sue someone, accounts receivable, etc.
14 Patents and copyrights.
15 The money you will get as an inheritance.
16 Tools and instruments used at work.
17 Any office equipment that you have not included in your business inventory and household goods.

3 Creditors and your debts -

You have to list your priority debts and unsecured debts in Schedule E/F. You can list your secured debts in the Schedule D and Statement of Intention. Make sure you list all your creditors in the Schedule D, E, and F.

Creditors

      Make a mailing list for the court containing the following details: 
      Names and addresses of creditors

      Names and addresses of debt collectors

      Name and address of the court to whom you owe money

      Name and address of the co-debtor who has not filed bankruptcy with you

      Account numbers

      This is called the Creditor Matrix.

      Instruction:

      Type all the details in capital letters on a blank form.

      Type your name and contact details in a single column on the left side.

      Leave one-inch space at the upper and lower part of each page.

      Do not insert page numbers.

      Mention the mailing addresses of all the creditors under their names.

      Do not provide any other information apart from your name and mailing address.
    
Debts

      Priority Debts

      Judgments for injury or death - Amount ($)

      Income tax - Amount ($)

      Child support - Amount ($)

      Alimony - Amount ($)

      Unsecured debts

      Credit card debts - Amount ($)

      Loans - - Amount ($)

      Medical bills - Amount ($)

      Student loans - Amount ($)

      Fines and restitution - Amount ($)

      Utilities - Amount ($)

      Overdue rent - Amount ($)

      Gambling debt - Amount ($)

      Mortgage after foreclosure - Amount ($)

      Secured debts

      Mortgage - Amount ($)

      Auto loans - Amount ($)

      Second mortgage - Amount ($)

      Judgment liens - Amount ($)

      Title loans - Amount ($)

Note

List each creditor only once, even if you have several accounts under him. Do not include your and your spouse’s mailing addresses in the Creditor Matrix.

As soon as you create and submit the Creditor Matrix, the court will inform creditors and others mentioned in the list that you have filed bankruptcy.

Sign the verification of the Creditor Matrix.

After you have created your Creditor Matrix, it is time to sign the verification of the Creditor Matrix, where you inform the court that all the details are correct. If you are filing for bankruptcy with your spouse, then make sure both of you sign the form.

4 Statement of intention -

Download the Statement of Intention form. It contains two parts. The first one is the Schedule D, and the second one is the Schedule G.

If you have secured debts, then use the Statement of Intention form to inform the bankruptcy court about what you want to do with them and the collateral.

You have two options.

You can surrender the property used as the collateral for secured debts.
You can retain the property used as collateral for secured debts.

If you want to retain the property, then inform the court how you are planning to pay off secured debts.

You have three choices.

Retain and redeem:

You make a lump sum payment to the creditor. You pay what the property is worth. However, if your outstanding balance is more than the fair market value of the property, then you can redeem it. You have to pay the market value of the property right now. Your debt will be discharged after making the lump sum payment.

Retain and affirm:

You can inform the court that you will make payments to the lender under a new loan agreement. You can keep the same loan agreement too. However, if you miss payments, the lender can foreclose your property.

Retain the property by working out a payment plan with the lender:

You can keep making payments to the lender and retain the property. The lender may agree or reject your proposal.

Step 2: Submit your bankruptcy petition.

After you have gathered and completed your paperwork, you can submit your Chapter 7 bankruptcy petition to the court after paying $335. It is the bankruptcy filing fee. The court clerk will schedule your bankruptcy petition. The U.S. Bankruptcy Court will appoint a trustee to monitor your case. In the case of Chapter 7 bankruptcy, the trustee will sell your non-exempt properties and use the proceeds to pay off your debts. Check out the state exemptions to see what properties you can protect from bankruptcy. Usually, you can keep your primary home, essential clothes, vehicles, pensions, etc.

Step 3: Handle your creditors in the 341 meeting.

The US bankruptcy trustee will organize a creditors meeting within 40 days of submitting a bankruptcy petition. You have to answer several questions in this meeting under oath. Make sure you attend this meeting as the bankruptcy trustee tries to work out a solution with creditors.

Types of questions you may face

Have you listed all your assets accurately?
Do you have non-exempt assets that can be sold to pay off your debts?
Have you transferred any property before filing bankruptcy?

Step 4: Complete the Personal Financial Management course.

You have to do a Personal Financial Management Instruction Course within 45 days of the creditors meeting. The bankruptcy trustee can give you a list of approved organizations that offer this course. Once you have taken this step, the trustee will start discharging your debts one by one after selling your non-exempt assets.

Step 5: Act as per the bankruptcy court’s instructions.

The court will ask you to do certain things for discharging your debts. The whole process takes between 4 and 6 months to complete your case. Act as per the instructions of the bankruptcy court. Do not hide any facts or try to manipulate the court to avoid dismissal of your bankruptcy case.

Step 6: When you should get help from the lawyer.

If the means test forbids you from filing Chapter 7 bankruptcy due to your high state median income, then you can file Chapter 13 bankruptcy. However, in that case, it is better that you consult an attorney as Chapter 13 bankruptcy laws are way more complicated than Chapter 7. Moreover, you have to deal with the court for 3 to 5 years, and that is a tough task.