Wednesday, April 15, 2015

Can I File My Own Bankruptcy?

April 15, 2015

Dear Cathy:

I am really getting serious about my finances and I am thinking of filing a bankruptcy.  I have heard you can file your own bankruptcy.  Is this true and how do I do this?  Bankruptcy Bound, Memphis, TN

Dear Bankruptcy Bound:

Bankruptcy should be your last option, but it is an option.  First of all you must understand that a bankruptcy is simply a reorganization of your finances.  Bankruptcy is a legal proceeding that allows you to get out of excessive debt and gain a fresh start financially.  

There are four (4) common types of bankruptcies:
-Chapter 7 allows either an individual or business to discharge virtually all unsecured debts.  Remember new bankruptcy laws will require persons with a certain income to pay back a portion of their debt.

-Chapter 11 is for individuals or corporations engaged in business who desire to reorganize their debts and seek court protection while they negotiate a plan of re-organization with creditors.

-Chapter 12 is like Chapter 13 but is only for family farmers.

-Chapter 13 is an alternative to a Chapter 7 bankruptcy.  It is designed for “wage earners” with relatively small amounts of consumer debt (as opposed to business debt).

Bankruptcy attorneys typically charge anywhere from $500 to $1,500 or more.  If you do not have the money to hire a bankruptcy attorney, you can file the bankruptcy yourself.  You can go to an office supply store such as Office Depot or Staples and buy the bankruptcy kit for a very low price.

Fill out the forms to the best of your ability and take it to the courthouse and obtain a case number.  This process will cost around $100 or more.  Fax the sheet with the case number on it to the mortgage company.  This should stop the foreclosure.  It will buy you some time so you can obtain the rest of the funds to solicit help from a bankruptcy attorney or give you time to move.

It’s imperative that you secure an attorney that specializes in bankruptcies and not a catch-all attorney, or a jack of all trades.  You should avoid large bankruptcy firms that treat you like a herd of cattle.  They won’t return your calls or answer your questions without an appointment.  Some large firms also rotate you from attorney to attorney, leaving no stability and no one really knowing your case directly.

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