Bankruptcy is a legal pro­ceed­ing in federal court in which a person with debts (called the debtor) can be freed or “discharged” from most of the debts. Below is a step by step guide to help you in the process of filing for bankruptcy. You should not skip any step as completion of each step is essential to a complete filing. However, even after following all of the steps, you should check with the bankruptcy court to make sure you have all the necessary documents as their requirements may change from time to time.

STEP 1: How do I decide if I want to file?

If you do not have any assets (valuable property that is not exempt such as a second car, second house, newer electronics) you are judgment proof. This means that even if a creditor gets a judgment against you for the amount you owe, they have nothing they can take from you to satisfy that judgment. Therefore, you can just ignore the creditors and not pay. However, you still need to attend all court hearings and explain your financial situation. If you choose to do this you can send a ­­stop annoying phone call letter to the collection agencies that should help reduce the number of harassing phone calls you receive. However, creditors can still call between 8:00am and 9:00pm but only to notify you they are seeking other remedies. This is not a good option for someone who is temporarily unemployed or will soon be inheriting any valuable asset, because once you start receiving pay or assets the creditor will then be able to enforce the judgment they have against you by garnishing your pay or taking your newly acquired assets. These debts will still be reported on your credit report for up to seven years. The fact that you filed for bankruptcy cannot remain on your credit report for more than ten years.

Additionally, you will want to consider how much of your debt is dischargeable. Credit card debt, medical bills, and business related expenses are generally dischargeable. However, student debts, taxes, and child support are generally not dischargeable. For a complete list see the ­­Bankruptcy Packet  page 2. If you only have secured debt, collateral backed by the loan that the creditor can reposes, then bankruptcy is not a good option. It would be better to try to negotiate with the creditor for a modified payment plan.

Also you cannot file bankruptcy if you have recently received a discharge of your debt. See ­­Federal Bankruptcy Basics page 12 for details on how long you must wait after filing either a chapter 7 or 13 before you can file again.

STEP 2: How do I determine which chapter to file under?

If you do decide to file for bankruptcy you must decide if you wish to file under chapter 7, 11, or 13. In Chapter 7 an appointed trustee liquidates any non-exempt assets you have to split between the creditors and then the debt is discharged.  Chapter 7 is primarily for consumer debt and is subject to the ­­property exemptions and secured creditors rights. To determine whether your car would be exempt property you should check the value on ­­Kelly Blue Book. For a general overview of chapter 7 see page 14 of the federal bankruptcy guide. Chapter 11 is for commercial enterprises who wish to reorganize their business to repay their debt by reducing the debt or extending the time for repayment. You should not do a chapter 11 pro se.  For a general overview of chapter 11 see page 29 of the ­­Federal Bankruptcy Basics .  Chapter 13 is used when you have regular income and you want to keep a valuable asset by continuing to make some payments through a court approved 3-5 year payment plan.  This is a good option if you are facing foreclosure and have the ability to make payments. For a general overview of chpater 13 see page 22 of the federal bankruptcy guide. See ­­page 6-7 of ULS bankruptcy basics for a comparison of the options.

STEP 3: How do I obtain all three of my credit reports?

You need to request credit reports from Equifax, Experian and TransUnion. If you have not done this in the past year it will be free at www.annualcreditreport.com. If it asks for a credit card number you are not in the right place.

STEP 4: How do I determine which mandatory counseling courses are approved?

You must complete an approved credit counseling course within 180 days of filing your petition. For a list of approved credit course providers, go to the Utah Bankruptcy Court website.  The course will cost between $30 and $50 and can be done over the internet. Many of them offer fee waivers if you ask. You will need to file the certificate of completion with your bankruptcy petition.

STEP 5: How do I make a list of all of my property, income sources, debts, and monthly expenses?

These lists will help you fill out the paperwork that you will submit to the Court. You should make this list for the household, which means you list all of your spouse’s assets and debts even if you are not filing jointly. See ­­pages 9-10 for a worksheet to fill out.

STEP 6: How do I download and print Utah Legal Services’ bankruptcy packet of instructions?

Utah Legal Services has created a Bankruptcy Basics Packet. We recommend you download and print this packet for important information about the bankruptcy process including how to fill out each required form. We will be referencing pages from that packet throughout this step by step guide.

STEP 7: Where do I download and print the petition?

The actual document you file with the Bankruptcy Court is called a Petition. You will need to download and print the forms at www.utb.uscourts.gov. You will click on forms, then current forms. The following forms are what you need to click on and print;

•  The highlighted Packet of Official Forms
• Statement of Current Monthly Income and Means Test Calculation (there is one for ch. 7 and a different one for ch. 13)
• Checklist (one for ch.7 or different one for ch.13)
• Payment Advices Certification (for both ch.7 and ch.13)
• Statement of Intent (for ch. 7 only)
• Model Ch. 13 Plan (if filing ch. 13) You will need to create a payment plan using this model
• In addition if you have any interest in an educational retirement account or a state tuition program you will need to provide a record of that account. You may also have to file a statement of any anticipated increase in income or expenditures you will have over the next 12 months.

STEP 8: How do I fill out the petition and all the associated forms I printed in step 7?

Using your credit report and your lists of assets and debts fill out the paperwork the best you can. There are specific detailed instructions on ­­pages 12-17 of the packet. If you have questions regarding the vocabulary in the documents you can refer to the ­­federal bankruptcy glossary. If you run into problems at this stage call the 801 374 6766 ext. 3446. Leave a message if you do not get through and a volunteer attorney will return your call within a week. Please state your intake number and what time is best to reach you. If you do not have an intake, please call 801 328 8891 or 800 662 4245 before calling the above number.

STEP 9: How do I identify any debts I wish to reaffirm (continue to pay)?

Some creditors can still take your exempt assets if the debt is secured. This means that if you used the money borrowed to buy something on credit then the creditor can take that item to satisfy their debt. Some examples would be a car where the bank has the title, a mortgage on a house, or even a washer and dryer bought on a credit card. If you have any of these assets and you wish to keep them, the best option is to claim bankruptcy and then continue to pay the debt. However, some creditors may require you to sign a reaffirmation agreement. Essentially, by reaffirming the debt the creditor will work with you to modify your payment plan to get caught up with back payments and to be able to make the payments going forward. The creditor will want to make sure that you will be able to make the payments so you will have to show some source of income to make the payment once the other debt is discharged. Additionally, some creditors may require you to use their forms. If this happens you may wish to bring it to the clinic to get some advice before you sign it, as often these agreements are not favorable to the debtor and may not be worth the asset you are trying to keep.  To reaffirm a debt you will need to download and print the reaffirmation documents at www.utb.uscourts.gov, click on unrepresented debtor. Print the following documents:

• Reaffirmation Agreement
• Cover Sheet
• Motion for Court Approval of Reaffirmation
• Order Approving Reaffirmation
• Notice of Hearing for Court Approval of Reaffirmation

You may also consider HAMP (Home Affordable Modification Program) to help modify your mortgage loan so you can keep your home. You can find more information by calling 1 888 995 4673 or go online to www.MakingHomeAffordable.gov. This is a free service.

STEP 10: How do I determine if I need a fee waiver or payment plan?

If you are filing a chapter 7 and are unable to pay the $299.00 filing fee you can apply for a fee waiver. The application is found at www.utb.uscourts.gov, under forms, current forms. Print the Application for Waiver of Chapter 7 Filing Fee. The Court will make this determination based on your income, so if you have the money to pay in installments fill out the installment application instead of the waiver because the court will not grant a waiver if you have the means to pay the fee. You also cannot get a fee waiver if you paid anyone to prepare your forms.

If you are filing a chapter 13, you may be able to apply to pay the fee in installments. The application is again at www.utb.uscourts.gov under forms, current forms. Print the Application to Pay Filling Fee in Installments.  All installments must be paid within 120 days of filing the petition.

STEP 11: How do I create a mailing matrix?

You will need to submit a list of creditors and their addresses so the Court can notify them that you have filed and that an automatic stay is in place. This list will be divided into two matrices, one for domestic support creditors and the other for all other creditors. Once you have filed your petition, you will need to amend your matrix to include the Trustee.

There is a sample format for this matrix at www.utb.uscourts.gov under forms, current forms on the right hand side called Format Guidelines for List of Creditors. Another alternative is to submit this matrix by email. The instructions are also at www.utb.uscourts.gov on the right near the bottom and is entitled Submit Mailing Matrix to the Court via E-mail. This link includes instructions on how to convert your document to text format to be automatically uploaded into the Court system.

STEP 12: How do I file the documents with the bankruptcy court?

Once you have all the above documents filled out, and your counseling course certificate, you can then either take them into the court or mail them. You will need to pay your filing fee at this time, if you are not seeking a fee waiver. While there are three bankruptcy courts in Utah you must file your paperwork in Salt Lake City, so if you do not live near Salt Lake you should plan on mailing your documents to the court.  You can get directions to the courthouses at www.utb.uscourts.gov, under Court Information Tab, Court Location. See ­­page 17-18 for more information.

Frank E. Moss US Courthouse

If you feel that you have not filled out the paperwork correctly or you have further questions contact the Bankruptcy Hotline at 801 374 6766 ext. 3346 or take your paperwork to the Debtors Counseling Clinic held every fourth Thursday of each month at the Salt Lake City Public Library, 400 E. 210 S.

STEP 13: What happens next? The court will mail notice to your creditors and appoint a Trustee.

At this point the Court will mail notice to your creditors that an automatic stay is in place. An automatic stay means that the creditors are not allowed to contact you or attempt to collect debts while the bankruptcy is pending or during the 3-5 years you are in payment under a chapter 13. This means that they cannot call, garnish your wages, send you letters, start an eviction action, foreclose on your house or repossess property. If they do call, tell them that you have filed and that an automatic stay is in place. If they call after a couple of weeks (so you know that they have received the notice from the Court) then you have a cause of action against them under the Fair Debt Collection Practices Act (applies only to collection companies) or under the Utah Consumer Sales Practices Act (applies to all creditors).

The court will also appoint a trustee to evaluate your estate and determine whether there are any assets to liquidate in order to pay creditors. You will also be notified of any documents that you may be missing and will be given time to provide the requested information. You must comply with all of the trustee’s requests or your case could be dismissed.

STEP 14: What is the Creditor’s Meeting (applicable to both Chapter 7 and 13 cases)  and also a Plan Confirmation Hearing in Chapter 13 Cases that I have to attend?

You will be required to attend a 341 Meeting of the Creditors. At this meeting the creditors will be allowed to ask you questions regarding your debt and assets to determine if they want to file anything in court to keep their debt from being discharged. You must send a copy of your most recent tax return to the Trustee at least a week before this meeting along with a declaration regarding the return. You will get a list of documents you must take with you to the meeting of creditors. Under a chapter 13 you will also have to take the first payment under your plan to the meeting of creditors. More information on ­­pg 19-20 of the Basics to Know Packet.

In Ch. 13 you will also be required to attend a Plan Confirmation Hearing where the Court will determine if they are going to accept your 3-5 year payment plan. Your plan has to outline how you will pay secured debt as well as unsecured debt.  Any back owed amount must be paid during the plan.  You can get more information on page 25 of the Federal Bankruptcy Basics.

STEP 15: How do I get information regarding the Debtors Education Class I have to attend and where do I file the certification of completion?

Once your debt has been discharged you are required to complete a Debtors Education Class. You will need to file your certificate with form B23 located at www.utb.uscourts.gov, under forms, current forms entitled Debtor’s Certification of Completion of Instructional Course Concerning Financial Management. For a list of courses see http://www.justice.gov/ust/eo/bapcpa/ccde/de_approved.htm. This course usually costs between $45-$75 and is usually done online. Again, call a few to see if you can get a fee waiver.

STEP 16: When is my case over? The court will then grant discharge (ch.7) or payment plan (ch.13).

The creditors will have an opportunity to file objections to the discharge. Once the time period for any such objections has passed the Trustee will file a report with the Court stating that the estate has been liquidated or that there were no assets to liquidate. Once the report is approved by the Court, your debt will be discharged or your payment plan will be accepted. A chapter 7 discharge usually takes about 60-90 days after filing the petition. Chapter 13 is discharged as soon as the payment plan is successfully completed. However, even if you complete the payment plan your long-term debts will not be discharged, such as a mortgage loan. Once the discharge is complete the court will mail notice to your creditors.

Below are some frequently asked questions about Bankruptcy.

• What is Bankruptcy?
• Should I consider Bankruptcy?
• What is an “Automatic Stay” in a Bankruptcy?
• Can I get rid of all my debts through Bankruptcy?
• Are there credit service organizations that will help me avoid bankruptcy?
• Does Bankruptcy hurt my credit rating?
• What property can I keep after Bankruptcy?
• How much does it cost to file for Bankruptcy?
• What is a Chapter 13 Bankruptcy?
• How does a Bankruptcy affect my divorce, and how does my divorce affect a Bankruptcy? 

• How can I get help with Bankruptcy?

Click here, to read all the questions and answers for bankruptcy.