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Can I File for Bankruptcy Online?

The question about whether you can file for bankruptcy online is a tricky one in 2018 because the answer is “No!”

And “Yes!”

No, you can’t file online if you’re a consumer representing yourself in a bankruptcy petition, at least not yet.

But yes, you can file bankruptcy online if you hire a lawyer who has registered with the court and knows how to use the current online system.

Online Bankruptcy Filing Software

The U.S. Court system recognizes the problem people have filing Chapter 7 or Chapter 13 bankruptcy online and is working to develop software that will accommodate consumers and lawyers, “but we’re not there yet,” said Cathy McEwen, a judge in the U.S. Bankruptcy Court for Middle Florida.

“There has been popular sentiment toward making bankruptcy more accessible and getting to the point where consumers could file online,” she added, “but the system is extremely complicated. We’ll get there. We’re just not there yet.”

The administrative office of the U.S. Courts said it is developing software the will make it possible for anyone and everyone to file for bankruptcy electronically and the system could debut as early as summer of 2018.

While you wait for the filing software to be developed, there are some parts of the bankruptcy process that can be handled online such as:

  • Evaluation of your finances to see if you qualify for bankruptcy
  • Mandatory credit counseling from an approved provider before filing
  • Downloading forms that must be filled out to file for bankruptcy

Each of those represents a step in the bankruptcy process, but there are so many twists and turns in the road to the finish line that even Judge McEwen isn’t sure if the system will ever allow someone to receive a bankruptcy discharge without ever leaving their keyboard.

“There is no such thing as filing by computer and saying “OK, that’s it. All my debts are gone!’ “ Judge McEwen said. “The process is really a lot more complex than that. At the very least, you’re going to have to come to the courthouse to meet with the (bankruptcy) trustee and your creditors.”

For the record, there were 486,347 Chapter 7 bankruptcy cases and 294,637 Chapter 13 cases filed in 2017. Only about 8% of those cases were filed “Pro Se,” meaning people tried to represent themselves.

Why Lawyers Can File Online

The simple answer is that filing bankruptcy cases is what they do for a living – not a once-in-a-lifetime occurrence like it would be for an individual – so it pays (literally) for them to keep up with advances in technology.

Attorneys start by registering with the local Bankruptcy Court to be an electronic filer. In most districts of the Bankruptcy Court system there is a training course and attorneys must sign a certification that they have taken the course.

There are many benefits to both the client and lawyer for filing bankruptcy online:

  • The client receives quicker notice of case activity, creating a longer time for responding to pleadings or motions
  • Lawyers can file documents 24 hours-a-day, 7-days-a-week. They don’t have to worry about whether the courthouse is open.
  • There are no postage costs or mail delays.
  • The date is stamped on the petition and can be compared for date and time of foreclosure sale.
  • Lawyers know the same day that the documents they file are accepted, rather than waiting for days while those documents are transmitted by mail.
  • Attorneys receive electronic notices as soon as any case activity takes place and is docketed on the case record.
  • Electronic filing makes for a more efficient system for clerks in the courthouse.

“With lawyers, there is a certain reliability factor – because of their legal training – that you don’t have with individuals,” Judge McEwen said. “We can predict that a high percentage of the necessary work will be done correctly and that we can have the commensurate amount of staff to handle quality assurance and control.”

Why Consumers Can’t File Bankruptcy Cases Online

As mentioned, this could change as quickly as the summer of 2018, but the current case management system used by courthouses is extremely complex.

The filing must be coded in such a way that it creates a docket entry and places the paperwork where it needs to be. If the filing is coded incorrectly, it could tangle up the court system and/or cause the consumer to have their case dismissed for any number of mistakes.

There also is the matter of the communication channels and timing necessary if the bankruptcy judge has questions or wants additional information regarding the case. Who performs quality control to make sure that problems are corrected and the flow of cases is not interrupted because one party or the other didn’t show up?

Those are just some of the problems programmers are trying to solve as they update the U.S. Court system’s current software. It’s why bankruptcy experts suggest that individuals not registered with the system are better served filing papers at the courthouse themselves and allowing the clerks there to code it correctly.

Online Evaluation Process

If you have not decided what debt-relief option will solve your financial problems, you can go online through a nonprofit credit counseling agency and get an answer as quickly as 10-15 minutes.

Find the credit counseling agency’s online site and follow the prompts to sign up. You will have to answer questions about income, assets you own and debts you still have. The online service will measure your level of debt compared to income and assets, then offer a suggestion on what is your best debt-relief option.

A counselor will call you to verify the answers you gave during the online interview were accurate and be sure the right solution was sent your way. Bankruptcy is one of the solutions, along with a debt management program, debt settlement or debt consolidation.

If bankruptcy is the best solution, you will receive a certificate of course completion and a referral to a bankruptcy lawyer, or you can go online and find one yourself.

Can the Evaluation Process be Handled by Phone?

Yes. Credit counselors can ask the same questions that you would answer online and use the same program to determine what debt-relief solution best suits your situation.

Online Bankruptcy Pre-Filing Program

Once you make the decision to declare bankruptcy and have consulted an attorney, you must attend a pre-bankruptcy counseling class, also known as a pre-filing counseling session. The class must be offered by an organization approved by the U.S. Trustee Program, except in Alabama and North Carolina, where the bankruptcy administrator approves an agency.

This is a 1-2 hour course designed to make the consumer aware of debt-relief options other than bankruptcy. The course will ask the consumer to go through 10-15 aspects of their finances such as preparing a budget and spending plan; organizing records, managing money, understanding credit score and requesting a credit report. There will be question asked in each category.

When you finish answering the questions, you must call the approved counseling agency and go through a briefing with a credit counselor. The counselor will go over your answers to make sure that you still feel that bankruptcy is the right choice.

When the briefing is over, the counseling agency issues a certificate of course completion, which must be part of the package when you file for bankruptcy. If you don’t have a certificate of completion, your case will be dismissed.

Can I Do the Pre-Filing Program over the Phone?

Yes, the course is offered online, over the phone or in person at the offices of an approved credit counseling agency.

The same scenario applies – review different aspects of finance; answer questions; review program with a counselor; and receive a certificate of completion.

Taking the course over the phone normally runs from 90-120 minutes.

What Is the Cost to File Bankruptcy Online

The fees for filing bankruptcy online are the same as if you filed at the courthouse, unless you use one of the online vendors that charge a separate fee for their platform to fill out forms. Even then, you still have to print off the forms, bring them to the courthouse and pay a filing fee.

Chapter 7 bankruptcy fees total $335, which breaks down to $245 filing fee; $75 administrative fee; and $15 trustee surcharge. If you have to re-open a Chapter 7 filing, it’s an additional $260.

Chapter 13 bankruptcy fees are $310 with $235 going for filing and $75 for administrative costs. If you have to re-open a Chapter 13 filing, the fee is $235. If you have to convert from Chapter 13 to Chapter 7, the fee is $25.

How Can I Find a Bankruptcy Attorney

If you contact a nonprofit credit counseling, they will assist in finding a bankruptcy attorney in your area or you can simply go online and search for one. Many areas have bankruptcy bar associations that have their own websites.

Where Do I Find Forms to File Bankruptcy on My Own?

Bankruptcy forms are available here -- http://www.uscourts.gov/forms/bankruptcy-forms -- and can be downloaded for free. Be careful to fill out all necessary forms and include payment for filing fees (listed above) when you take your forms to the courthouse for filing. One of the forms is a checklist of what other forms need to be filled, depending on the type of case you’re filing.

Be aware that submitting forms not filled out completely, or not included in the filing, could cause your case to be dismissed. Many bankruptcy courts and law schools host free help sessions, staffed by volunteer lawyers for individuals attempting to represent themselves. Check with your local law school or courthouse for time and availability.

Carefully consider your decision before filing as an individual. Be certain you have the time, skill and resources to file on your own, especially if you have considerable assets that could be lost if your case is not discharged.

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Author

Staff Writer

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at bfay@debt.org.

Sources

  1. NA, (2018, January 24) Bankruptcy Filings Fall 0.7% -- Smallest 12-Month Decline Since 2010. Retrieved from http://www.uscourts.gov/news/2018/01/24/bankruptcy-filings-fall-07-smallest-12-month-decline-2010
  2. NA, ND. Filing Without an Attorney. Retrieved from http://www.uscourts.gov/services-forms/bankruptcy/filing-without-attorney
  3. Flynn, E. (2018, January) Dead-on-Arrival Cases (at Bankruptcy Court). Retrieved from https://s3.amazonaws.com/abi-org-corp/journals/numbers_01-18.pdf
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