Types of Bankruptcy
Individuals typically file for either Chapter 7 or Chapter 13 bankruptcy. Also known as liquidation, Chapter 7 requires a debtor to give up all nonexempt assets to a bankruptcy trustee who then sells those assets, using the proceeds to pay off as many of the debtor's creditors as possible. In contrast, debtors who file for Chapter 13 bankruptcy don't give up anything. Instead, they enter into a repayment plan that lasts three to five years, paying as many creditors as possible. Any debts that remain unpaid at the end of liquidation or repayment plan are discharged and the debtor is no longer responsible for them.
Regardless of the type of bankruptcy filed, the debtor must submit certain documents along with the bankruptcy petition. These include the following: a statement of financial affairs; schedules of assets, liabilities, income and expenditures; contracts; and unexpired leases and copies of tax returns. As part of the data collection process, debtors must provide the bankruptcy trustee with copies of all financial and bank account statements, usually for the past 60 days, or longer depending on the individual court's procedure. This means a debtor must turn over statements for checking, savings, money market, and retirement accounts, stocks and bond statements, credit card statements, and the like. Debtors are sometimes also required to provide these statements again at the Meeting of Creditors, or 341 meeting, held a few weeks after the bankruptcy filing. The financial documentation must reflect the balances held in each account on the date of the bankruptcy filing.