How to Prepare for Bankruptcy: Counseling, Documents, and Filing

Preparing to file for bankruptcy means choosing the right chapter, completing a required credit counseling session, gathering detailed financial records, avoiding transactions that a trustee can undo, and filing a complete petition with the correct fee. Get these steps right and your case moves forward on schedule. Miss one and the court can delay or dismiss your filing before you see any relief.

Decide Which Chapter Fits Your Situation

Most individuals file under one of two chapters, and the preparation work differs depending on which you choose.

Chapter 7 is liquidation. A court-appointed trustee takes your non-exempt property, sells it, and pays creditors from the proceeds. Most remaining unsecured debts are wiped out, and the case typically closes in about four months.¹

Chapter 13 is a repayment plan. You keep your property and commit to a three-to-five-year court-supervised plan funded by your regular income. Remaining qualifying debts are discharged once you finish the plan.¹

Chapter 13 requires regular income and caps how much debt you can carry: $1,580,125 in secured debt and $526,700 in unsecured debt.²

The Means Test for Chapter 7

Eligibility for Chapter 7 turns on a means test that compares your average monthly income over the past six months to the median income for a household of your size in your state. If you’re below the median, you generally qualify.

If your income is above the median, you move to a second calculation. Subtract allowed monthly expenses — housing, transportation, taxes, health insurance, and other necessities — from your income. If the disposable income left over is too low to fund a meaningful repayment plan, you may still qualify for Chapter 7. You report this on Official Bankruptcy Form 122A-1, and Form 122A-2 if the full calculation is needed.

Failing the means test does not shut you out of bankruptcy. It typically means filing Chapter 13 instead.

Complete Credit Counseling Before You File

Federal law requires every individual filer to complete a credit counseling briefing before becoming eligible to file.² The session must happen within 180 days before your filing date, and it must be provided by a nonprofit agency approved by the U.S. Trustee’s Office. Sessions typically run about 60 minutes.³

The counselor reviews your finances, walks through alternatives to bankruptcy, and helps you build a basic budget. Fees usually run $10 to $50, and agencies must reduce or waive the charge if you cannot afford it. At the end of the session the agency issues a certificate of completion, and you file that certificate with the court along with your petition. Without it, your case faces immediate dismissal.²

A narrow exception exists. If you can show exigent circumstances and prove you tried but could not get an appointment within seven days of asking, the court may temporarily waive the requirement. You would still have to complete the counseling within 30 days of filing.

Gather Your Financial Documents

Accurate forms depend on thorough records. Start pulling documents together well before you plan to file.

Tax returns for every tax period within the four years before your filing date. The IRS can move to dismiss your case if required returns are missing.⁴⁵
Proof of income covering the six months before filing: pay stubs, business income records, or other documentation. This feeds the means test.
Current statements for every checking, savings, investment, and retirement account.
Titles, deeds, and appraisals for vehicles, real estate, and other valuable assets. You will list each item at current market value, not what you paid.
Statements from every creditor: credit cards, medical providers, mortgage companies, auto lenders, and student loan servicers.

Pull free credit reports from all three bureaus before filing. Reports often surface forgotten debts, like an old medical bill or a closed credit card, that still need to appear in your petition. Leaving a creditor off the schedules can complicate your discharge.

Avoid Financial Moves That Can Sink Your Case

The trustee will look closely at your transactions from the months and years before filing. Certain moves can delay your case, shrink your discharge, or draw accusations of fraud.

Transferring Property

A trustee can reverse any transfer made within two years before filing if it was done to put assets beyond creditors’ reach or if you received less than fair value in return.⁶ Handing your car to a family member, selling property to a friend at a steep discount, or moving money into someone else’s account can all be undone. State law may extend the lookback even further.

Paying Certain Creditors Ahead of Others

Paying off one creditor while ignoring others in the 90 days before filing lets the trustee claw the payment back and redistribute it. The lookback stretches to a full year when the creditor is an insider — a relative, business partner, or someone with a close personal or financial relationship with you.⁷ Repaying your parents or a friend right before bankruptcy is a textbook preference the trustee will likely reverse.

Running Up New Debt

Luxury purchases totaling more than $900 to a single creditor within 90 days of filing are presumed non-dischargeable, meaning the court will likely hold you responsible for them even after bankruptcy.⁸ Cash advances over $1,250 taken within 70 days of filing face the same presumption. The court reads recent splurges as evidence you never intended to repay.

Know Which Debts Bankruptcy Won’t Erase

Bankruptcy eliminates many debts, but not all of them. Certain categories survive both Chapter 7 and Chapter 13. Understanding what remains is part of deciding whether filing will actually improve your situation.

Child support and alimony cannot be discharged under any circumstances.⁸
Most student loans survive bankruptcy unless you can show that repayment would impose an “undue hardship,” a standard that is difficult to meet.
Taxes due within the past three years, taxes for which no return was filed, and taxes tied to fraud are generally non-dischargeable.
Debts obtained through false pretenses or fraud, and debts from willful injury to another person, remain.
Criminal fines and restitution are not wiped out.

In Chapter 13, non-dischargeable debts fold into your repayment plan. You still owe them; you pay on a structured schedule.

Complete the Forms and File the Petition

The petition is a package of official forms, each capturing a slice of your financial life. Every form is available on the U.S. Courts website.⁹

Start with Form 101, the Voluntary Petition for Individuals Filing for Bankruptcy, where you provide identifying information and select your chapter.¹⁰ From there your financial data goes into a series of numbered schedules:

Schedule A/B lists all your property, from real estate to household items, each at current market value.
Schedule C lists property you claim as exempt, such as a portion of home equity or a primary vehicle.
Schedule D lists secured creditors whose loans are tied to collateral, like a mortgage or auto lender.
Schedule E/F lists unsecured creditors, split between priority debts (certain taxes, domestic support) and general debts (credit cards, medical bills).
Schedule G lists ongoing contracts and leases.
Schedule I reports your current monthly income; Schedule J reports your current monthly expenses.

The gap between Schedule I income and Schedule J expenses shows the court your disposable income, which the trustee compares to your means test results. You also complete the Statement of Financial Affairs (Form 107), which asks about lawsuits, property transfers, gifts, gambling losses, and other financial activity from recent years. This is where you disclose the transfers and insider payments the trustee will be looking for.

The petition includes a declaration under penalty of perjury. Filing false or incomplete information can result in denial of your discharge, fines of up to $250,000, or imprisonment for up to 20 years.¹¹

Filing Fees and How to Pay Them

You file with the clerk of the bankruptcy court in the judicial district where you live. Most courts use electronic filing, though in-person or mail filing may be available depending on local rules.

The total filing fee is $338 for Chapter 7 (a $245 base fee, $78 administrative fee, and $15 trustee surcharge) or $313 for Chapter 13 (a $235 base fee and $78 administrative fee).¹²¹³ If you can’t pay upfront, you have two options:

Installment payments through Form 103A, available in both Chapter 7 and Chapter 13. The court lets you spread the fee across several payments.
A fee waiver through Form 103B, available only in Chapter 7. You may qualify if your income is below 150 percent of the federal poverty line for your household size and you cannot afford installments.¹⁴

Your petition must arrive with the credit counseling certificate. The clerk will not accept a filing missing the certificate or the filing fee, unless you’ve filed a fee application.¹⁴ Beyond court fees, many filers hire an attorney. Legal fees for a standard bankruptcy run roughly $500 to $4,000 or more, depending on the chapter and the complexity of the case.

1
United States Courts. Discharge in Bankruptcy
2
Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
3
U.S. Department of Justice. Frequently Asked Questions – Credit Counseling
4
Office of the Law Revision Counsel. 11 USC 1308 – Filing of Prepetition Tax Returns
5
Internal Revenue Service. Declaring Bankruptcy
6
Office of the Law Revision Counsel. 11 USC 548 – Fraudulent Transfers and Obligations
7
Office of the Law Revision Counsel. 11 USC 547 – Preferences
8
Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
9
U.S. Courts. Bankruptcy Forms
10
United States Courts. Voluntary Petition for Individuals Filing for Bankruptcy
11
United States Courts. Official Form 101 Voluntary Petition for Individuals Filing for Bankruptcy
12
Office of the Law Revision Counsel. 28 USC 1930 – Bankruptcy Fees
13
U.S. Courts. Bankruptcy Court Miscellaneous Fee Schedule
14
Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 1006 – Filing Fee