Filing for bankruptcy has never been an easy or pleasant task. In most cases, you had to hire a lawyer to help you out with all the paperwork and you had to do it all in person. However, in the midst of the global health crisis, some people have had to ask the question – can you file for bankruptcy online? If you can pay your taxes and do pretty much everything else online – you should be able to file for bankruptcy too, right?
Well, in a sense – yes. You could do this from your computer, however, things aren’t as simple as they probably should or could be. Many wonder how safe and reliable all of this is and that’s a sound concern since the whole things is fairly new. We’ve decided to do a little bit of research on the subject and maybe come a little bit closer to answering the question – how reliable are online bankruptcy services?
To fully understand the whole online filing process, we must first understand what our options are, we have to go through the whole process and only then decide whether that’s a safe and reliable method.
What Are Your Options?
As far as bankruptcy goes you have two options – you can file for either Chapter 7 or Chapter 13 bankruptcy, just like you would regularly do.
Chapter 7 is the most commonly filed form. When you file for chapter 7, you’re asking the court to relieve you of your unsecured debts like credit card or medical bills, or in some cases even personal loans. If you get approved, the court will try and settle your debts with the creditors by selling any non-essential, valuable stuff you own.
In the case of Chapter 13, you’re asked to devise a debt repayment plan and if approved, court guarantees the safety of your assets during the duration of the repayment plan.
If eligible, you could file for any of them without any prior consultation with an attorney or other experts, but we wouldn’t really advise you to do that. According to Harris & Partners, preparation for filing is arguably the most crucial step of the process. You don’t want to make any mistakes that could jeopardize your appeal before you even start.
How To File Online?
There are a few ways to file for bankruptcy online. You could either download the forms from the US Court’s website or use one of the filing apps that you can find online. Both of them will work just fine, but the apps are a little bit better optimized for an average user.
Analysing Your Situation
The first part of the process is making you’re eligible for either Chapter 7 or Chapter 13 bankruptcy. Not everyone is, so you have to go through this step if you want to continue. If you’re filing for Chapter 7, then you must take what is called a ‘means test’.
To become eligible for Chapter 7 bankruptcy you must prove that your income is at or under the median income for your state. The means test does just that. If based on your income, expenses and assets, you’re deemed under the median income – you automatically qualify. Luckily, even if you’re over the median income – it’s not over. There’s still a way to qualify for Chapter 7, but it’ll take some legal counselling considering the complexity of the process.
As we’ve mentioned already, make sure you can qualify before you start the process, because if you’re well above the median income for your state, there’s no reason for you to even try and file for Chapter 7.
Credit Card Counselling Course
Since you’re filing without an attorney, you have to go through credit counselling before you can move on with the process. You’ll have to go through the course within six months of the initial filing. You have to pass this course or otherwise, you won’t be able to move on. Once you do, you’ll receive a certificate and the court will allow you to continue. The good thing about it is, it’ll take you about an hour to finish the course.
Filling Out Forms
The most gruesome part of the process is filing forms. It starts simple – with the Voluntary Petition, Form B1 and then it gets interesting. This part of the process alone is why lawyers charge upwards of thousand dollars to help with the bankruptcy cases. There are many, many pages you have to fill out with the information on your creditors, contractors, repayment plans and so on. You’ll virtually go through your whole financial history and touch on the foreseeable future. It’ll take some time, you can be sure of that.
Filing A Petition
After you’re done with forms, you’ll file a petition that will get your case to the court. This will also make your assets unavailable to creditors until the case is resolved. Following that, you’ll meet with a court-appointed trustee about selling your non-essential properties, so your debt can be paid off.
Attending ‘341’ Meeting
Now, at this point, we’re virtually done with the online part of the process, as you’ll have to meet with the court-appointed trustee and possibly some of the creditors. This is where you’ll be asked about your financial situation so that the trustee can assess your situation. This is one of the last steps of the process and is in most cases just a formality that you’ll be done with within 15 minutes or less.
Attending A Financial Management Course
The final step of the process is taking another online course – this time a Debtor’s Education or Financial Management course – however you want to call it. Once you’re done with this, it’s safe to say that you should expect the call from the trustee saying that you’re debts are settled.
Now, what’s the final verdict – are online services reliable? In a word – yes. Is it going to be easy? No. Is it all online? No. Will you need outside help or a piece of advice? Most likely. All in all, the process of filing for bankruptcy online is perfectly safe and reliable but just don’t expect it to be fully online or easier than it would be to do it the traditional way. The only major difference is that you’ll save some money you would otherwise spend on a lawyer.