Numerous similarities exist between a typical bankruptcy case and an emergency bankruptcy petition. However, unlike a standard bankruptcy filing, only the necessary paperwork must be filed to initiate the process.
What’s An Emergency Bankruptcy?
When a debtor has to immediately block a creditor from collecting on a debt, they can file for emergency bankruptcy, often known as a ’skeleton bankruptcy’ case.
By filing for bankruptcy under the automatic stay provision for emergencies and submitting the other required documents, a debtor can protect himself from collection efforts and other potentially devastating consequences. This article will teach you How to File an Emergency Bankruptcy Petition.
In What Circumstances May It Be Necessary To File For Emergency Bankruptcy?
There are times when bankruptcy is an absolute necessity. These examples provide a situation where an automatic stay is instantly necessary to avoid the following collection operations:
- Home/Residence Foreclosure
- Vehicle Repossession
- Creditor litigations; and
- Wage garnishments
It’s helpful to cite a specific emergency to show that there’s a genuine case and that the debtor truly requires debt relief and is not merely abusing the court’s powers. Due to the minimal requirements of an emergency bankruptcy petition, it’s also known as a ‘skeleton filing’ or a ‘bare bones bankruptcy filing’ because only the framework of a bankruptcy case needs to be fulfilled in an urgent circumstance.
What Documents Are Required To File For An Urgent Bankruptcy?
The bankruptcy petition is the heart of any bankruptcy filing and is crucial even in an urgent bankruptcy. A debtor must identify himself and specify which chapter of the Bankruptcy Code serves as the legal basis for the filing. Individual bankruptcies are typically filed under Chapter 7 or Chapter 13, depending on the debtor’s circumstances.
Paperwork For Emergency Bankruptcy Filing
- The Bankruptcy Petition
- A List of Creditors and their contact information
- Credit counseling completion certificate or waiver request
- Duly accomplished Form 121
The debtor must pay a filing fee even if they are filing for emergency bankruptcy, but if they meet the requirements, they can ask the court to waive the fee.
What Should You Do Before Filing Emergency Bankruptcy?
- Steps For Filing An Emergency Bankruptcy
It can take several months and a lot of paperwork to complete the bankruptcy process. You should be familiar with the bankruptcy process as follows:
- File The Petition
The first step in the procedure is for a debtor to file a petition with the federal bankruptcy court in their district after gathering all of their financial documents and creating an itemized list of their assets, liabilities, spending, and other important financial information.
- Automatic Stay Granted
As a general rule, the court issues an automatic stay order the moment the emergency bankruptcy petition is filed. As soon as the order is issued, it will be legally binding. The automatic stay is a temporary injunction that prevents creditors from taking any action to collect a debt, including eviction, legal action, and communication (phone calls and letters) to the debtor demanding payment.
- Prove The Necessary Documents
Following the filing of the petition, the debtor will be allotted a certain length of time (often 14 days) to complete and file all necessary bankruptcy documentation. Proof of income and expenses, proof of ownership of any relevant assets (such as investment accounts), and attendance and completion of any required credit counseling sessions are some examples of required documentation.
If the debtor fails to file these papers by the deadline, the bankruptcy case will be dismissed without any debts being forgiven. The debtor must pay more money to the court to reopen the case. The bankruptcy court may impose sanctions on a debtor if it finds out that the individual is abusing the bankruptcy system.
- Pros And Cons Of Filing For Emergency Bankruptcy
Understanding the pros and cons of filing for emergency bankruptcy is essential before a debtor decides.
Below are some pros to filing for emergency bankruptcy:
- To prevent immediate repossession of property, foreclosure of a home, or a creditor suing the debtor for money owed (but this does not indicate that these things won’t happen in the future);
- To retrieve property while bankruptcy is pending, enabling the debtor to obtain the protections an automatic stay gives.
On the other hand, below are some cons to filing for emergency bankruptcy:
- Even in circumstances of sudden financial distress, the debtor must attend the required credit counseling sessions and obtain a completion certificate before filing for bankruptcy.
- Not all people in financial need are eligible for instant bankruptcy. Those who have already filed for bankruptcy may not be eligible for emergency bankruptcy or may be subject to stricter criteria than those who are filing for bankruptcy for the first time;
- Even though it’s an emergency filing, a debtor must still comply with most procedural requirements, such as providing all documents requested by the bankruptcy court.
- After the bankruptcy hearing, the debtor may still be required to pay off certain non-dischargeable debts (such as spousal support). A debtor cannot file for emergency bankruptcy, take advantage of the automatic stay, and drop the case.
- Consult With A Bankruptcy Attorney
While you can technically file for bankruptcy without a lawyer, you shouldn’t. It’s highly advised to retain the services of a bankruptcy attorney due to the severe and lasting monetary repercussions of filing for emergency bankruptcy.
The Final Note
When filing for bankruptcy under the ’exigent circumstances’ exemption, you must submit the essential paperwork to the bankruptcy court. An emergency filing may be your best option if you face an immediate collection threat. If you end up in one of these predicaments, you may need to file for bankruptcy quickly. Once the emergency petition is filed, the automatic stay, which prevents collection efforts, takes effect.
However, you only have 14 days to finish the remaining documentation. This may be harmful to you and your credit score if complications arise. So, if you don’t submit the remaining paperwork by the deadline, your case may be thrown out.