Filing for Bankruptcy

When you file for bankruptcy, you are legally declaring that you are unable to pay your debts. Filing for bankruptcy will severely affect your credit rating and stay on your personal credit report for up to 10 years.

Notice of Alternatives
An individual who wishes to file a bankruptcy case would receive a written notice of alternatives containing:

a brief description of chapters 7, 11, 12, and 13 and the general purpose, benefits , and costs of proceeding under each chapter;
a brief description of services that may be available from a credit counseling service;
warnings about penalties for concealment of assets and false oaths or statements; and
notice of the possibility of an audit. Unless the court ordered otherwise, an individual debtor (or debtor's attorney or bankruptcy petition preparer) would have to file a certificate with the court to show that the debtor received and read the notice of alternatives. If the debtor failed to file a certificate within 45 days after filing the bankruptcy petition, the case would be dismissed automatically on the 46th day.
Credit Counseling Requirement for Bankruptcy
“Credit is like a looking-glass, which when sullied by a breath, may be wiped clear again; but if once cracked can never be repaired.” --- Sir Walter Scott

Individuals who wish to file a bankruptcy petition are now required to undergo credit counseling through an approved credit counseling service within 90 days before filing the bankruptcy petition.

The credit counseling requirement would be fully waived only if the United States Trustee determined that the approved credit counseling services for a district were not reasonably able to provide adequate services for the additional individuals who would otherwise seek such services. United States Trustees would annually review any such determination.

Find an approved Credit Counseling Service in your area.

Bankruptcy Post Petition
Under certain circumstances, a debtor would be permitted to file the bankruptcy petition first and then undergo credit counseling within 30 days post-petition. In either case, a debtor would have to file with the bankruptcy court a certificate of compliance from the credit counseling service and a copy of the debt repayment plan, if any, developed through that service.

Automatic dismissal would not occur if a debtor failed to file a certificate from a credit counseling service pre- or post-petition. Instead, the United States Trustee or a party in interest could move to dismiss the case based on the debtor's ineligibility.

Bankruptcy Alternative Budget Analysis
The credit counseling provision would require debtors to participate in an individual or group briefing that outlines opportunities for available credit counseling and helps them perform an initial "budget analysis."

Although the term "budget analysis" is not defined in the law, it appears to contemplate an analysis of the debtor's income and expenses, including all secured and unsecured debts and considering the debtor's available disposable income, to determine whether the debtor can pay creditors through a debt repayment plan without imposing undue hardship on the debtor or the debtor's dependents.

Approved Bankruptcy Alternatives
The United States Trustees would have responsibility for approving credit counseling services. Approved services would be included on a list provided to debtors and maintained by the bankruptcy clerk for each judicial district.

Only the listed agencies would be authorized to provide the certificates of compliance that debtors must file with the bankruptcy court. The credit counseling provisions would take effect 180 days after the date of enactment of the Act.

Find a Bankruptcy Lawyer in your area.

Bankruptcy and Reaffirmation Agreement
Should there be a certain debt that you wish to repay rather than be included in your bankruptcy filing, you could apply to the court for a special payment plan to retire that debt.

In some cases a person's vehicle may be deemed as a necessity. When the car loan is reaffirmed, you keep the car as long as you make the payments under the new terms.

Read about the Bankruptcy Abuse Prevention, Consumer Protection Act of 2005 and the New Bankruptcy Law.

How did your Congressperson vote on the Bankruptcy Abuse Prevention, Consumer Protection Act...



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