Before an individual debtor files for bankruptcy, he or she must ordinarily get credit counseling from an approved provider within 180 days before filing a case. Use only a credit counseling agency that appears on the U.S. Trustee's list of approved credit counseling agencies for the District of Maryland.
The individual debtor must file with the petition a statement of compliance and a certificate of credit counseling furnished by the provider. Failure to do so could result in dismissal of the case.
Should I hire an attorney?
While corporations and partnerships must have an attorney to file for bankruptcy, individuals may represent themselves in bankruptcy court. But failing to file a required document, such as a credit counseling certificate, could result in a debtor losing the right to file over again or losing protections in a later case. Bankruptcy also has long-term financial and legal consequences. For these reasons, the federal bankruptcy courts strongly recommend that an individual debtor hire a competent attorney.
Choosing the proper Chapter to file under
A debtor must consider which Chapter of the Bankruptcy Code to file under. Most personal bankruptcies are filed under Chapter 7. In a Chapter 7 bankruptcy, the debtor may keep only certain exempt property. The remainder of the debtor's assets are gathered and sold by the bankruptcy trustee, and the proceeds are used to pay the debtor's creditors. The Chapter 7 debtor receives a discharge of most of his or her unsecured debts, although certain debts such as taxes cannot be discharged.
Individual debtors who have regular income may seek an adjustment of debts under Chapter 13 without a liquidation. A plan of repayment must be filed and approved by the bankruptcy court. One advantage of Chapter 13 is that it provides individual debtors with the opportunity to save their homes from foreclosure by allowing them to "catch up" past-due payments through the plan of repayment.
Family farmers have their own Chapter under the Bankruptcy Code - Chapter 12. If an individual or family business qualifies under the statutory definition of "family farmer," Chapter 12 is designed to give family farmers swamped by debt and facing insolvency a fighting chance to reorganize their debts and keep their land.
Debtors who are engaged in business, such as corporations, partnerships and sole proprietorships, may want to stay in business and avoid liquidation. These debtors should consider filing under Chapter 11. The debtor in a Chapter 11 bankruptcy may seek an adjustment of debts, either by reducing debt or by extending the time for payment, or the debtor may seek a more comprehensive reorganization.
Filling out the required forms and schedules accurately, completely and truthfully
A debtor must list all property and debts in the bankruptcy schedules. If a debt is not listed, it is possible that the debt will not be discharged.
A debtor must fill out, or assist his or her attorney in filling out, all forms accurately, completely and truthfully. The judge can deny the discharge of all debts - the chief object of any bankruptcy filing - if a debtor does something dishonest such as destroying or hiding property, falsifying records or lying. Importantly, individual bankruptcy cases are randomly audited to determine the accuracy, truthfulness and completeness of the information the debtor is required to provide.
If you are a resident of Maryland, Virginia or Washington D.C. struggling with debt and are considering filing for bankruptcy, you should contact a competent and experienced bankruptcy attorney who can advise you whether and under what Chapter to file, as well as handle the actual filing and representation during the pendency of the bankruptcy proceeding.