How to File Bankruptcy Online in the USA

Bankruptcy has a silver lining to it. It is a second chance to keep an orderly finance system thereafter. However, it is the last option for anyone. With growing technology, it is convenient to file tax returns to book an order for a car online. But, can you file bankruptcy online? The answer is a clear yes, but you need to maintain care and caution while doing so as it can get tricky.

Filing Bankruptcy online is a process from creditor meetings to court hearings. It has lots of paperwork involved and has to be done as an individual. Educational requirements and paperwork can be carried online with assistance from an attorney and, in some cases, free of charge. However, even when it is done free, legal advice is mandatory. What exemptions have to be taken, the price involve, and other legal issues involved in the process have to be figured out. A lawyer will be required to file your e-paperwork.

What is Bankruptcy?

Bankruptcy is a quick method that is considered to wipe out any kind of unsecured debt. This method is often taken as a last resort when there are large amounts of debt that you are not able to manage anymore. This helps you to gain a fresh financial beginning.

The unsecured debts that are considered for a wipeout in bankruptcy:

Credit-card debt
Utility bills unpaid
Medical bills unpaid
Payday loans
Deficiency balances
Personal loans
Lawsuit judgments
Foreclosed/repossessed real estate
Traffic tickets unpaid

Bankruptcy does not exclude:

Student loans
Income-tax debt (lesser than 3 yrs old)
Child support
Spouse maintenance

Kinds of Online Bankruptcy

For any individual, there are two types of bankruptcy primarily. They come under Chapter 13 and Chapter7.

Chapter 7- It is a popularly used type of bankruptcy. This type account for 63 percent of bankruptcy cases. You request the court to clear/wipe your unsecured debts. These debts include personal loans, credit card, and medical bills. Your non-essential property is sold out, and debts are paid off. It includes stamp collection, jewelry, car, artwork, and so on. The money procured through these items is paid off to your creditors.

Chapter 13-When your debts are not cleared/wiped, you are placed in a 3-5 year repayment plan. This way, your assets are shielded.

Selecting a suitable type of bankruptcy to file online is best done with legal advice. Certain attorneys will offer a free consultation for the first time and provide decent price quotes to help you with your online filing for bankruptcy.

Who is eligible to file bankruptcy?

Chapter 7 and Chapter 13 are applicable for filing as long as the median income of the family is not over 65,000 dollars per annum. This amount is for a family with three members. Suppose you earn more than you still will be eligible to qualify, depending on your income disposal for post-specific expenses. For others with larger income status, filing for bankruptcy can be done under Chapter 13 with a repayment plan to clear your debts.

Before considering filing for bankruptcy

If bankruptcy is giving you a fresh financial start, why people do not go for it? Why is it the last resort to clear debts?

This is because of the following reasons:

It can harm your credit score severely.
It is on your credit score for over 7-10 years. The duration is based on the type of bankruptcy.
It becomes a touch to obtain a car loan, credit card, or future mortgage.
It can result in higher rates of insurance.
It can impact your ability to obtain a rented apartment or a job.

Alternatives to Bankruptcy

Some of the alternatives that can be considered before bankruptcy are:

Negotiation with your creditors.
Repayment plans and forbearance for a longer time in case of home mortgage and personal loans.
IRS negotiation with payment plans in case of income tax debt.

How to File Bankruptcy Online in the USA?

Download online bankruptcy forms for free at https://bit.ly/303vGdx.

Summary of the Chapter 7 filing bankruptcy

Finishing Bankruptcy forms
Filing them to the court
Attending creditors 341-meeting

Let us take a look at the steps involved in filing bankruptcy online.

Financial review

Review your finances and its history. Chapter 7 type of bankruptcy cannot be filed if you have filed chapter 7, eight years before. If you have filed Chapter 13 type of bankruptcy, then your next filing can be done only after six years for Chapter 7.

Debt review

When filing online for bankruptcy, the court will ask you to file a list of debts you have and the money you owe.

Your Debts are categorized into Secured and Unsecured debts

Secured debts- These debts are the loans that you have secured with a creditor on a property. Your property was offered as collateral to obtain the loan. Car loans and mortgages are secured loans examples with a car or house as collateral.

Unsecured debts-These are the debts that have no collateral or procured through a property. Some examples are medical bills, credit cards, and personal loans.

High priority debts

The court considers debts of secured form to be of high priority. This is because the creditor can claim your property upon failure to pay the debt. The creditor can claim your collateral.

Go ahead with the Means Test

If the above criteria are met, you can go ahead to take the Means Test. This is a test form that determines your eligibility. It evaluates whether or not you are broke to be eligible to file Chapter 7 type of bankruptcy. This is done by comparing your monthly income on an average to the median family income. The median income is assessed based on the income of similar residences of your state. You qualify for filing when your income is less than the average income.

When the criteria of income higher than the state’s average is met, other formulae are included within the means test for bankruptcy. For these aspects, certain legal help and advice may be needed to proceed further as they are complex.

Receive Counselling on Credit

Enroll in credit counseling for bankruptcy from any approved agency. You will have to show a course certificate in order to file online for bankruptcy. The course certification takes about 6 months to finish. Once the course is finished, a course completion certification is issued, which you have to submit during online filing to the court.

Bankruptcy forms filling

Voluntary Petition is the first form to be filled. It is referred to as Form B1. Other forms need to be filled to provide information on your contracts, creditors, debt specification for repayment plans and expenditures.

Petition filing

Filing a petition will cease your creditors to pursue any kind of action against you. This is because your case has been put on a court schedule. The court appoints a trustee with Chapter 7. The trustee is meant to meet you and make the sale of your non-exempt estate/property. In the process, your home, pensions, clothes and care are safe. Your car and house can be repossessed if any of your loan payments are skipped. Once the trustee is assigned, an automatic stay is issued by the bankruptcy court. This will avoid any creditor to claim or seize your assets through a foreclosure or confiscation of your property.

“341” meeting with creditors

Creditor meeting is called for which is also referred to as 341-meeting. This is where a trustee is allotted for your bankruptcy case. He or she will query you regarding your finances, under an oath. This is where your trustee will do your identity verification, bankruptcy petition details, and its accuracy. Any schedules and changes after filing have been done have to be revealed at this point. Your creditors can query you regarding your finances here. The meeting lasts about 10 minutes or below. It is a face to face creditor and trustee meeting.

Course for Financial Management

The course mentioned should be taken to post the meeting with creditors and trustees. It should be finished in about 45 days. InCharge provides this course for you to produce their certificate in court in the bankruptcy filing. They offer education courses for bankruptcy that is approved by the court via their site PersonalFinanceEducation.com. These courses are approved for code-compliance US Trustees certificates. A pre-filing and pre-discharge counseling session for bankruptcy has to be finished when you are filing for bankruptcy.

Online filing and an attorney

It is tricky as to file a petition, legal help is required which can be provided by a lawyer. Unless the bankruptcy software is thoroughly self-represented, you may not be able to file on your own, just as for California State. It’s the only state with such software. There are several agencies that offer you guidance and service to help you fill the required forms. However, they are not supposed to provide any kind of legal advice in regards. Not only this, judges and employees of the court are likewise prohibited from any kind of legal advice. Legal services free of charge can be accessed in cases where you are unable to hire a lawyer. Some legal services to name are Legal Services Corp and The American Bar association. However, they can be approached for simpler cases.

Attorney pricing

Chapter 7-The costs of the attorney are generally to be paid pre-filing as part of qualifying Chapter 7 filing. Chapter 7 pricing is generally from 500-3,500 dollars.
Chapter 13– The costs of the attorney may not be paid totally, but some part of the costs involved can be paid through repayment plan to pay debts. Chapter 13 pricing is generally from 2,500-6,000 dollars.

Costs are subdivided as below

Filing Fee
Trustee surcharge (chapter 7)
Administrative Fee
The trustee surcharge is absent for Chapter 13.
Conversion from Chapter 13 to 7- 25 dollars

What are the things are covered online in when filing online for Bankruptcy?

With or without an attorney, some things that can be done online for filing Bankruptcy. Let’s take a look at them below.

Pre-filing

Attending and finishing a credit counseling court-approved course prior to filing online.
Take a debtor course that is approved post-filing and prior to your discharge. The courses can be taken up online.
Bankruptcy forms are available officially from the court website. Get a copy for free.
Get credit reports for free online.

Post Filing

Ensure all notices are from the Bankruptcy Court of USA and you read them all. This can be done online. This way you will not lose any of their notices.
DeBN systems are used in the majority of the courts. This system offers free notices to the ones who are filing in the court. Ensure this service is available through the phone number and the court site.
If DeBN is not available EBN-Electronic Bankruptcy Noticing can be used through an attorney.
Both the system will allow saving the notices as PDF images. This will allow you to see for free several times.
NDC- the National Data Centre for chapter 13 type of bankruptcy that permits you to view the creditor’s claims, what amount is paid, and to who, current payments confirmation, and others.
Another online tool for Chapter 13 bankruptcy online is for the filers to view payments of repayment plan through an online check.

What are the things that are not covered online when filing online for Bankruptcy? (Some rules have been relaxed and altered due to covid-19)

The districts that do not permit I-File or eSR will have to file a bankruptcy case and its paperwork in person. Mailing is possible.
In I-File or eSR districts, paying fees for filing has to be done in person or by mail.
Documents needed are sent to the trustee assigned through the mail. This could be checked with the trustee assigned for any other alternative.
A video conference or phone can be used in the pandemic. However, the creditor meeting-341 meeting is carried in person.
Reaffirmation and court hearings are handled on phone due to pandemic but otherwise taken up only in person.

The bankruptcy forms can be submitted online through the below methods:

Non-Attorney based submissions- The majority of bankruptcy courts do not permit the non-attorney submission of forms online. Check the various options available currently on the local court website.

I-File and eSR systems-eSR or Electronic Self representation software is an online tool available for free. It permits debtors to create and submit bankruptcy of chapter 7 forms online in selected courts. It assists individuals to file forms of bankruptcy online without any need of an attorney. As of 2020, California and Western District-Missouri have implemented this system to file online. I-File is a similar system in Colorado district to file online for bankruptcy. But it lacks ESR’s preparation features.

Hiring a lawyer- US courts permit filing bankruptcy forms online through an attorney specific in dealing with bankruptcy cases. They offer a free consultation for first-timers. The consultation is available through a phone, computer, tablet, or PC via a conference. Online portals are used by these lawyers to finish the form questionnaire. Thereafter, all the supporting documents are required from clients to upload. The attorneys are qualified and provide features suitable to assist you in every way to file bankruptcy online.

Hire a Petition Preparer- A bankruptcy petition filing can be done with the help of a preparer who would do it for a fee. Since the Bankruptcy code is very regulated, a preparer will do it right. He or she is not linked to a law firm. They are, however, prohibited to give any legal advice. The post-procedure has to be followed by you such as submission of paperwork and others process in the court.

A petition preparer uses a web app online and guides you to file your bankruptcy forms online for free and on your own. Simple cases are taken up by them. For people who do not use the app, private attorneys can be hired for dedicated help with the bankruptcy filing.

How Attorneys can file bankruptcy online?

Attorneys can file bankruptcy online by registering with a Bankruptcy court locally. This makes them a registered electronic filer. A certificate of completion of the course is mandatory for an attorney.

Advantages of the online bankruptcy filing

Quick notices and e-notices
Filing of documents round the clock
No delay as in mail and have no postage costs
Stamping of the date on the bankruptcy petition right away without delays.
The efficient system as the filing is electronic
Online guidance to debtors
Time-efficient

Conclusion

From above, it is clear than it is possible to file bankruptcy online in the USA with or without an attorney. Bankruptcy is a last resort to clearing debt. By knowing proper way of doing it online, you save time and money. The filing is done efficiently with step by step process as mentioned above. You can take a bankruptcy evaluation online for free. The evaluation process usually takes about 15 minutes. This will let you know if you qualify to file a bankruptcy and the costs involved in filing it online. The bankruptcy process involves evaluation of finances for qualifying the filing, credit counseling and court-approved certification and filing bankruptcy forms primarily. Filing bankruptcy online with the assistance of a petition preparer or by hiring an attorney is recommended.