ABA Family Legal Guide

Consumer Bankruptcy

Introduction to Bankruptcy

The Process of Filing for Bankruptcy

What is the process of filing for bankruptcy?

Filing for bankruptcy is a very personal, very serious decision. The three primary reasons that cause bankruptcy are divorce, loss of employment and large medical expenses. Most people file when they have made a good-faith effort to repay their debts, but see no other way out. Such people and businesses may declare bankruptcy by filing a petition with the U.S. Bankruptcy Court that asks the court to provide protection and relief under the Bankruptcy Code. In addition to that request, the debtor must provide information about his or her assets, liabilities, income, and expenditures. Complete disclosure, candor, and honesty are required. Often, debtors have a lawyer prepare and file the petition and other information for them, but some debtors represent themselves. After you have filed, under court supervision, either one of two results will follow. Either non-exempt assets will be sold or a three- to five-year repayment plan will be approved by the bankruptcy court. In both cases, the intent is to pay off as much of your debt as possible. Any unpaid debt will be discharged.