Bankruptcy: Frequently Asked Questions
Where do I actually file bankruptcy?
There are almost 90 bankruptcy courts scattered throughout the United States. Every state has at least one, but some of the larger states have as many as five. States that have more than one bankruptcy court are usually labeled by the area they serve in a state, e.g., northern district, southern district, western district, and southern district.
There is a directory of bankruptcy courts at this website. Find the bankruptcy court located closest to you and click on the link to that website. At each bankruptcy court website you can find bankruptcy forms you can download, and all sorts of information to help you decide if bankruptcy is the best option for you. You do not have to register or give any personal information to download information at the bankruptcy court websites.
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Do I have to turn over money in my retirement accounts when I file bankruptcy?
Generally, all funds in tax-exempt retirement accounts and pension funds are exempt from seizure in a bankruptcy. This is true regardless of whether or not one files bankruptcy using the state exemptions or federal exemptions. Any type of retirement account including 401ks, 403(b)'s, profit-sharing, money purchae plans, IRAs, SEP's, SIMPLE plans and defined-benefit plans are exempt. There is an exception for Roth IRA's and traditional IRAs with more than one million dollars in them. Federal law, 11 U.S.C. 522(n), caps these accounts at $1 million per individual (which is adjusted every three years for inflation). If you have more than one million in a traditional IRA or Roth IRA, you should inform your attorney of this if you decide to file bankruptcy.
When you read the state exemptions, you might notice the phrase any property "exempt from taxation under Sections 401, 403, 408, 408A, 414, 457 or 501(a) of the Internal Revenue Code." This phrase is referring to all the types of retirement and pension funds that are exempt from taxation under the IRS Code.
Do I have to turn over money put away from my children's college education? You do not have to turn over money you have set aside in a special education savings account that was set up under Internal Revenue Code sections 529 or 530 "Education Tuition Plans".
Can I file bankruptcy myself, without the assistance of an attorney? Yes, you can file bankruptcy without hiring an attorney and many people do it themselves in order to save anywhere from $500 to $5,000 in attorney's fees. You can download the forms at any bankruptcy court, along with instructions on filling out the forms and file them yourself with the bankruptcy court. Is it difficult? Some people can complete the bankruptcy forms themselves with no problem, while others seem to have enormous difficulty and hire an attorney. If you can complete your own tax returns, you can likely fill out your own bankruptcy forms. The ideal candidate for a do-it-yourself bankruptcy filing is someone who doesn't own a home, or have much in the way of assets, but does have lots of unsecured debt, like credit card debt. On the other hand, someone who owns property, has lots of assets and perhaps is self-employed, has minor children and lots of money in savings and retirement should definitely hire an experienced bankruptcy attorney.
Can I keep my vehicle after filing bankruptcy? If you own your vehicle outright, you might be able to keep it depending on the value of your car and if you get the okay from the bankruptcy judge and administrator at the bankruptcy court where you file. Debtors who owe money on vehicles must resolve the issue through redemption or reaffirmation of the debt. If you still owe money on the vehicle, you will have to reaffirm the debt with the lender. Bankruptcy does not protect you from having your car repossessed if you still owe money on it. If you use your vehicle as part of your job or to earn your living, you might be able to declare your car a "tool of your trade" since both federal and state laws exempt tools of trade from seizure by the bankruptcy court.
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