Success, of course, is relative, and will mean different things depending on the intended Chapter you file under, and if you are an individual or business entity.
The first step, regardless of your plans, is to obtain knowledgeable legal counsel who knows bankruptcy law. They, along with your financial advisors, will guide you through the process.
People and businesses ultimately choose to file for bankruptcy for a wide variety of reasons. The issue that drove the bankruptcy decision needs to be addressed head-on, rather than allowing history to repeat itself. The result of bankruptcy must not merely reset the clock, but right the root of the problem.
Individuals filing for bankruptcy will need to deal with the “means test” to assess which Chapter for which they are eligible. Credit counseling may also be required.
Bankruptcy is initiated by the debtor when they file a Schedule and a Statement of Financial Affairs (SOFA) with the bankruptcy court. Making the schedules requires the debtor to accumulate information regarding their assets, along with the related value of those assets. Liabilities must also be enumerated and detailed by the creditor and the amount owed and the related nature of the liabilities as secured, priority or unsecured.
The SOFA is a detailed set of questions requiring the debtor to disclose a significant amount of historical data, governance information, legal matters, and other substantive information related to the debtor, its assets, contingent matters, commitments and history.
Both the schedules and the SOFA are filed under penalties of perjury. Accuracy is critical, as failure to properly disclose is a potential federal crime.
Business entities also have several additional matters to attended to before filing. Some of those matters include:
Regardless of the Chapter of the Bankruptcy Code you file under, working with your advisors to assemble all of the information, prepare the analysis and develop a plan for an exit before you submit schedules to the court will ease the process and minimize the disruptions as you move through the process.