FAQs: Before Filing Bankruptcy

  • Attorney, Are All Debtors And Creditors Required To Have One?

    Business Debtor - A corporation, partnership, or unincorporated association may not file a bankruptcy petition or other court documents, or appear in court, without an attorney. See Local Bankruptcy Rule 9011-2(a).
     

    Individual Debtor or Creditor – An individual debtor or creditor is not required to have an attorney in order to file a bankruptcy petition, file other documents, or represent themselves at court hearings. This is true regardless of a chapter 7, chapter 11, or chapter 13 bankruptcy case. However, it is difficult for an individual to be aware of and protect all rights without the assistance of a competent bankruptcy attorney.


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  • Attorney, Can You Recommend A Good One?

    Attorneys -- The bankruptcy court is prohibited from directing you to a particular attorney.  View list of local county bar associations and regional bankruptcy law groups.

    Free or Low Cost Legal Assistance -- An individual debtor who is unable to afford an attorney may qualify for free legal representation. View list of phone numbers for low cost and free legal assistance.

    Friends or Bankruptcy Petition Preparers - The court often encounters debtors who cannot afford to pay an attorney to help them prepare bankruptcy forms. Sometimes a debtor pays a few hundred dollars to a "friend" to help file for bankruptcy. Often this is a mistake because there are many forms to fill out, many important deadlines, and many notices that a debtor will receive from the court. Often, this "friend" does not have access to the correct forms or gives bad advice to the debtor. Bad advice may be worse than waiting to file for bankruptcy because bad advice may result in a bankruptcy case getting dismissed. A debtor does not get a refund if the bankruptcy case is dismissed, and a debtor may not even get the relief that was hoped for.

    It is recommended that a debtor spend time on the court's website studying all of the required forms instead of relying on a person who may not be properly informed or educated in bankruptcy processes, or may not have the debtor's best interest in mind. An individual who cannot afford an attorney may come to the court before filing for bankruptcy and obtain a list of phone numbers for low-cost or free bankruptcy assistance. See Debtor Assistance Project for information.

     


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  • Automatic Stay, What Is It And Does It Protect A Debtor From All Creditors?

    Automatic Stay -- Immediately after a bankruptcy case is filed, an injunction (called the "Automatic Stay") is generally imposed against certain creditors who want to start or continue taking action against a debtor or the debtor's property. Bankruptcy Code Section 362 discusses the Automatic Stay.

    Protection for the Debtor – It is important to read relevant statutes from the Bankruptcy Code and/or to consult with a competent bankruptcy attorney about the Automatic Stay because in some situations there is no Automatic Stay at all, or there is only an Automatic Stay if the debtor obtains a court order which imposes the Automatic Stay. There are many different time frames and deadlines, and creditors (such as child support services) may still take action to collect from a debtor.

    For information on Motions to Continue or Impose the Stay, see link below.

    Creditors Obtaining Relief From the Automatic Stay -- If a creditor properly files and serves a Motion for Relief from the Automatic Stay, and a bankruptcy judge grants the Motion, the Automatic Stay will either be removed or modified so that the creditor can resume collection efforts against the debtor.

    For information on Motions for Relief from the Automatic Stay, see link below.


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    Relief From The Automatic Stay, How Do Creditors File This?
    Documents, What Do Debtors File To Have The Stay Imposed Or Continued?
  • Bankruptcy Code, What Is It And Do Other Rules Apply In Bankruptcy Cases?

    Bankruptcy Code - The Bankruptcy Code is a collection of statutes that govern the rights and duties of individuals, businesses, trustees, and attorneys that are involved in a bankruptcy case. These statutes will often be cited in a bankruptcy case by parties who are discussing various rights and duties. The Bankruptcy Code is also called "Title 11 of the United States Code" or "11 U.S.C."

    A copy of the Bankruptcy Code is available in law libraries, may be purchased from the Government Printing Office or some law bookstores or viewed online.

    Bankruptcy Procedure- Procedural rules regarding bankruptcy cases are found in the Federal Rules of Bankruptcy Procedure ("FRBP") and Local Bankruptcy Rules for the Central District of California (LBR). Individual judges may also have their own procedures, forms and instructions.

    Related Laws – Other laws of federal, state, or municipal governments may be applicable in a bankruptcy case because there are many situations that a debtor may be in at the time a bankruptcy case is filed. Examples are family law, contracts, real estate transactions, unsecured loans, taxes, medical situations, personal injury, etc. It is recommended to consult a bankruptcy attorney to discover which rules apply to the situation.


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  • Bankruptcy Form, What Happens If A Wrong Form Is Used?

    It is a debtor’s duty to ensure that the correct version of a document is filed with the bankruptcy court. If a debtor discovers that the wrong version was filed, that debtor should fill out the correct version together with the court-approved Amendment Form, and file them both with the court. The Amendment Form will be listed separately on the electronic bankruptcy case docket and lets the trustee and creditors know that a new version of a form has been filed. Sometimes the court will send a notice to a debtor, which points out that an incorrect version of a form has been filed and sets the deadline to file the correct version.

     


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  • Bankruptcy Forms, What Are The Names Of The Various Forms?

    Petition Package – This is a compilation of all forms required to start a particular chapter bankruptcy case.

    Petition – The document called a "Petition" is the official request to open a bankruptcy case, and the Petition contains basic information about a debtor's contact information, attorney, chapter number, and signature.

    Other Forms – While a Petition opens a bankruptcy case, this is only the beginning of the process. Approximately thirty (30) more documents are required so that the court and trustee knows how to properly treat a debtor and the debtor's financial situation:

    These documents have various titles including: "Schedules (A to J)," "Exhibits (C and D)" and then a combination of other forms titled "Statements," "Declarations," "Summary," "Disclosure," "Verification," "Notice," "Debtor's Certification," "Plan" (chapter 13 only), and "Venue Disclosure" (chapter 11 only). It requires time and organization to fill out all of the forms and be educated on the bankruptcy process, so please budget enough time to gather the information and complete the petition package documents before you need to file a bankruptcy case.


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  • Bankruptcy Forms, Where Can I Find The Updated Petition And Forms?

    To read and download free copies of the petition package (a petition, schedules, statements, declarations and forms) for bankruptcy chapters 7, 11, and 13. The format of these documents is updated often, so please verify that you are using the latest version. Also, make sure to file all of the documents that pertain to the bankruptcy chapter you are filing (7, 11, or 13). Also, make sure that all papers are signed wherever a signature is called for.

    Courthouse Filing Window - A package of the forms may also be purchased from the Clerk's Office.


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  • Bankruptcy Petition Package, How Many Copies Of This Must Be Filed?

    FOR DOCUMENTS FILED AT THE COURTHOUSE OR MAILED TO THE COURTHOUSE

    Bankruptcy Petition Packages

    • Chapter 7 petition and schedules: Original only.
    • Chapter 11 petition and schedules: Original only.
    • Chapter 13 petition and schedules: Original only.

    All subsequent documents: The original document and one copy.

    If a debtor or party wishes to have a “filed” stamped copy of the petition or other document, then one additional copy is required.

    To have the court mail a “filed” stamped copy back to your address, a self-addressed, stamped envelope must be submitted with the extra copy with sufficient postage to cover the cost of mailing the “filed” copy.

    FOR DOCUMENTS FILED USING CM/ECF - For bankruptcy petition packages and other documents that are filed using CM/ECF, one copy of that document must also be delivered the same day to the intake section of the clerk’s office by mail or personal delivery. The copy must be accompanied by a copy of the CM/ECF receipt, called a “Notice of Electronic Filing” or “N.E.F."  See the Court Manual.


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  • Bankruptcy, Why File?

    A) An individual generally files for bankruptcy in order to obtain one or more of the following benefits:

    1. have certain debts discharged completely or sort out which debts are dischargeable from those debts which will still be owed;
    2. receive extra time to pay debts;
    3. receive a break from creditor calls while debt relief is arranged;
    4. have the assistance of a trustee to pursue lawsuits or other claims that the debtor owns so that the money obtained can be used to pay creditors; or
    5. eliminate certain judgment liens if those liens impair an exemption.

     

    B) A business files for bankruptcy to obtain similar benefits, including the possibility of operating the business while debt relief is arranged. A business other than a sole proprietorship is not entitled to receive a discharge of debts in a chapter 7 case.

    There are negative consequences of filing for bankruptcy, and these may outweigh the benefits. For example, a potential debtor may need to resolve one debt (such as a mortgage), but if the home does not have any equity, there may not be any benefit to filing for bankruptcy. It is highly recommended that an individual or business owner who is considering filing for bankruptcy consult with a bankruptcy attorney to learn how a bankruptcy may affect its financial situation.


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  • Chapters Of The Bankruptcy Code, What Are The Different Types?

    The common chapters of the Bankruptcy Code are:

    CHAPTER 7 - Chapter 7 refers to a "liquidation" bankruptcy and can be used by an individual to obtain a discharge of many debts without making payments in the future. It may also be used by a business that wishes to liquidate its business assets under the protection of the bankruptcy court.

    A trustee is appointed to take control of certain asserts of the debtor and to sell or distribute these assets for the benefit of creditors. A trustee can also recover certain assets that have already been distributed and bring those assets back into the bankruptcy estate.

    Creditors generally have the right to file "claims" which identify the amount of money owed and the documents supporting the claim. In some situations may be able to file a written request (motion) to the court for an order allowing the creditor to take back a residence, automobile, or other property.

    CHAPTER 11 - Chapter 11 is often called the "reorganization chapter," and it allows a corporation, partnership, or individual to reorganize property and debts without liquidating all assets. The basic goal is for a debtor to retain control of property and present a "Plan of Reorganization" for repaying creditors. If the creditors accept the Plan of Reorganization, and the court approves the plan, a debtor is able to reorganize personal, financial, or business affairs.

    A trustee may be appointed if a motion is filed with the court and the court agrees that a trustee is needed to manage the affairs of the debtor.

    Creditors have the right to file "claims" which identify the amount of money owed and the documents supporting the claim. The can also object to a debtor's plan proposal, and in some situations file a written request (motion) for an order allowing the creditor to take back a residence, automobile, or other property.

    CHAPTER 13 -- Chapter 13 refers to reorganization of debts by an individual who has regular income and debts that are below certain statutory limits. A Chapter 13 debtor proposes a "Chapter 13 Plan" which proposes a repayment schedule. The plan essential identifies details for the debtor to retain control of property, keeping up with current debts, and repay at least some of the past due debts.

    A trustee is appointed to monitor activity in the case and report to the court on whether or not the debtor is meeting obligations. If a debtor is not meeting obligations, the trustee or a creditor can ask the court to dismiss the bankruptcy case. If a debtor's income rises, the trustee or a creditor can ask the court to increase the amounts paid to creditors.

    Creditors have the right to file "claims" which identify the amount of money owed and the documents supporting the claim. The can also object to a debtor's plan proposal, and in some situations file a written request (motion) for an order allowing the creditor to take back a residence, automobile, or other property.

    Basics of bankruptcy law.


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  • Cost, How Much Is It To File For Bankruptcy?

    Filing Fees to Start a Bankruptcy Case must be paid at the time a Bankruptcy Petition Package is filed:

    Chapter 7 Petition Package = $306.00.
    Chapter 13 Petition Package = $281.00.
    Chapter 11 Petition Package = $1,213.00.

    Fee Schedule of fees that apply when other documents are filed.


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  • Court Address, What Is The Address Of The Court Where Documents Are Filed?

    The Bankruptcy Court has five divisional offices located throughout the Central District. of California. Divisional Offices are located in Santa Barbara, Woodland Hills, Los Angeles, Santa Ana, and Riverside. If you need to file a document in person at the bankruptcy court, you should file the document at the intake window of the clerk’s office of each division for cases that have been filed in that particular division only.
    The specific location is determined by the zip code of a debtor's residence address or location of principal assets of the business.

    If a document is being filed electronically through CM/ECF, the electronic filing automatically routes the document to the correct bankruptcy case docket, regardless of the division in which the bankruptcy case was filed.


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  • Court Hours, What Are Normal Filing Hours And Can Emergency Bankruptcy Petitions Be Filed?

    Normal Court Hours to File Documents Filed at the Courthouse – The bankruptcy court filing window is normally open from 9:00 a.m. to 4:00 p.m., Monday through Friday. Federal Holidays on which the court is closed.

    Petition Packages and Documents Filed by CM/ECF – The CM/ECF system ordinarily accepts filing of bankruptcy petitions and documents 24 hours per day, seven days per week. 

    Filing Emergency Petitions or Documents After Normal Court Hours -- For a debtor or creditor who is not filing a bankruptcy petition package or other documents through ECF, and needs to file the petition package or documents after court hours, it may be possible to do so, but only by a pre-approved appointment. Contact the appropriate intake office to arrange for an emergency filing:

    Santa Barbara: (805) 884-4878
    San Fernando Valley: (818) 587-2865
    Los Angeles: (213) 894-6751 or 894-3141
    Santa Ana: (714) 338-5330
    Riverside: (951) 774-1102


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  • Credit Counseling And Personal Financial Management Certificates Of Completion, Does Each Debtor Get Them?

    Yes, the agency that provides the credit counseling service will provide a certificate that the course was completed, and the agency that provides the Personal Financial Management service will provide a certificate that the course was completed. If spouses file a joint bankruptcy case, both spouses must take each class and obtain their own separate Certificates of Completion for each class.


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  • Credit Counseling Certificate And Exhibit D, When Do I Need To File These?

    Credit Counseling Certificate + Exhibit D - At the same time that a bankruptcy petition is filed, an individual must fill out a document titled "Exhibit D" and file Exhibit D and the Certificate of Completion with the court. Many judges will dismiss a bankruptcy case if an individual does not strictly comply with this rule. There are very few situations in which a bankruptcy case may go forward without a credit counseling class being completed. To avoid having a bankruptcy case dismissed, it is strongly recommended that an individual consult a bankruptcy attorney to understand the credit counseling requirements. Important rules are Bankruptcy Code Sections 109(h) and 521(b) and Federal Rules of Bankruptcy Procedure Rule 1007.


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  • Credit Counseling vs. Personal Financial Management, What Are The Differences?

    An individual debtor must complete TWO DIFFERENT CLASSES to obtain a discharge. The names for these courses are: 1) Credit Counseling; and 2) Personal Financial Management. The courses are different in two ways: (a) When the class must be taken; and (b) What type of individual debtor must take the class. If a bankruptcy case is filed jointly, each spouse must take both classes.

    CREDIT COUNSELING, Before Filing For Bankruptcy – The Bankruptcy Code ordinarily requires an individual debtor (not a business debtor) to complete an approved course in Credit Counseling within 180 days before filing a bankruptcy case. See list of courses approved by the U.S. Trustee. The course can be completed in person, over the internet, or by telephone, and the credit counseling service will provide a certificate that the course was completed.

    PERSONAL FINANCIAL MANAGEMENT, Very Soon After Filing for Bankruptcy - In order to obtain a discharge of debts, an individual debtor (not a business debtor) must complete an approved course in Personal Financial Management within 60 days after the 341(a) Meeting of Creditors. See list of courses approved by the U.S. Trustee. The course can be completed in person, over the internet, or over the telephone, and the course provider will provide a Certificate of Completion.


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    Credit Counseling Certificate And Exhibit D, When Do I Need To File These?
    Personal Financial Management Certificate, Do I Need To File This?
  • Dismiss A Bankruptcy Case, Can The Court Do This If All Forms Are Not Filed?

    Avoid Dismissal of a Bankruptcy Case - In order for a bankruptcy case to proceed, it is a debtor's responsibility to provide the court with all information that is required by the law. If this information is not provided, a bankruptcy case may be dismissed without a debtor obtaining a discharge of debts.

    At the beginning of a bankruptcy case, if all of the required information is not filed with the court, the Clerk's Office will usually mail to the debtor a notice that identifies which documents or signatures are missing. The bankruptcy case will be dismissed without a hearing if this information is not provided within 14 days after a bankruptcy case is filed, unless permission is obtained from a judge to extend this deadline. Some items are due no later than 45 days after the bankruptcy case is filed, and after the 45-day period the court may dismiss a bankruptcy case without a hearing. In some cases, the court will prohibit a debtor from filing another bankruptcy case for 180 days or more.


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  • Eviction, Will Filing For Bankruptcy Stop This?

    Depending on the facts, the Automatic Stay may or may not prevent a landlord from evicting a tenant that has filed bankruptcy.  Consult with a bankruptcy attorney for information on how a bankruptcy filing affects enforcement of an eviction proceeding


    See Also:
    Automatic Stay, What Is It And Does It Protect A Debtor From All Creditors?
  • Fees, What Is The Payment Method For Bankruptcy Court Fees?

    Fees are required to file many documents with the court, including a bankruptcy petition package, a lawsuit (Complaint), certain motions, and other documents. Photocopies or certified copies of documents are available for a fee. Acceptable payment method of filing fees depends upon whether documents are filed electronically via CM/ECF or at the intake window of the clerk’s office.

    A) Petition Package or Document Filed Electronically via CM/ECF -- If an electronically filed document requires a fee, the fee must be paid by credit card (AMEX, VISA, MC or Discover).

    B) Petition Package or Document Filed at the Intake Window of the Clerk’s Office

    Fees Paid by an Individual Person - If an individual debtor files a bankruptcy petition package or other document at the courthouse, the bankruptcy court does not accept credit cards, but the fee may be paid with:
    (1) CASH (United States currency only);
    (2) U.S. POSTAL SERVICE MONEY ORDER; or
    (3) CASHIER’S CHECK issued by an acceptable financial institution.

    Fees Paid by an Attorney - If an attorney files a bankruptcy petition package or other document, in most situations the attorney must file the documents electronically via CM/ECF. However, if a document is not required or allowed to be filed using CM/ECF, and is filed at the intake window of the clerk’s office, the fee may be paid by:
    (1) CREDIT CARD (AMEX, VISA, MC or Discover);
    (2) BUSINESS CHECK made payable to the “U.S. Bankruptcy Court” that includes a current pre-printed name, street address, telephone number, and California attorney bar number;
    (3) CASH (only coins and currency issued by the United States);
    (4) U.S. POSTAL SERVICE MONEY ORDER; or
    (5) CASHIER’S CHECK issued by an acceptable financial institution.

    C) Requesting Photocopies or Certified Copies of Documents – The payment policy for obtaining copies is the same as the payment policy for filing documents. See above.


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  • File Documents, Must Documents Be Filed In Person, Or Can They Be Mailed Or Filed Electronically?

    Filing in Person at Intake Window – A bankruptcy petition package or other document should be filed in person if cash is used to pay the filing fee or if a “Filed” stamped copy of the document is desired. Although there may be a number of people in line, the wait is generally very short.

    Filing by Mail - Bankruptcy petition packages and other documents may also be mailed to the Court. If a debtor is filing a document that requires a filing fee, the debtor must include a cashier’s check or money order, as personal checks are not accepted. The cashier’s check or money order must read: “Pay to the Order of United States Bankruptcy Court.”

    Whether filing a document in person or by mail, determine the correct filing location by using the zip code of the debtor’s residence or principal place of business.

    Attorneys – In most situations attorneys are required to electronically file petition packages and other documents using the CM/ECF system. Register for CM/ECF. See the Court Manual for filing procedures. Additional information about  lodging orders electronically may be found here.


    See Also:
    Case Number, What Does It Mean?
    Fees, What Is The Payment Method For Bankruptcy Court Fees?

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