Step 1: FIRST AND MOST IMPORTANT: Do Not be Embarrassed!

Note to my clients: Many of you begin our initial discussion with an apology for your current financial situation.  Absolutely no apology is necessary.  Read the quote at the end of this article by James Madison, our fourth President (1809-1817).  There has been no financial certainty for anyone, including our government, since the founding of our country.  So how could you guaranty financial certainty in your daily life?  Your situation is affected by circumstances rarely in your control - health, employment, divorce, economy of the Nation, and changes in business policies.  As of 1789 the US Constitution Art. 1, Section 8, Clause 4 empowered Congress to enact bankruptcy law to help all citizens receive a fresh start.  The first bankruptcy law was enacted in 1800.  Obviously, this option has been seen as a valuable method to protect our citizens.  So never feel that you must apologize to me and anyone else for choosing this legal right. 

This fresh start principle is also set forth in the Bible. According to the Old Testament, every 50th year all debts were to be cancelled.  This was known as the "Year of Jubilee".  (Leviticus 25:10-15)  Also, every 7th year, creditors were to release their clients from debts.  This was called the "Lord's release".   (Deuteronomy 15:1-2)  "If you lend money to any of My people who are poor among you, you shall not be like a moneylender to him, you shall not charge him interest."  (25 New King James Bible)  "Restore now to them, even this day, their lands, their vineyards, their olive groves, and their houses, also a hundredth of the money and the grain, the new wine and the oil, that you have charged them" (Nebemiah 5:10,11)

No one wants to file bankruptcy.  Having said that, and in order to protect your health and peace of mind, along with that of your family, bankruptcy may be your only option.  Very few of us have the ability to completely control the financial part of our lives.  Companies fail, jobs are lost, people get sick and families are broken.  The creditors are happy to give everyone credit, whether or not they qualify.  These creditors have absolutely no regard to the person's ability to repay the credit.  The creditor makes more money when a borrower is late, defaults on a loan, or overdraws the credit limit or bank account.  Therefore, that creditor is gambling that they will earn more from borrowers in interest, penalties and additional charges then that creditor will lose as a result of bankruptcy.  They are leveraging their losses by giving out as much credit as everyone's mail boxes can hold.  Those same creditors will not work with the a borrower who is suffering a financial set back.  That creditor does not care if the borrower has never been late.  All that creditor wants is "their money"; just ask their collection agents.  Today, it is an extremely rare creditor that has any loyalty to their customers.

Step 2: Get Professional Help

The most difficult aspect of filing bankruptcy is not the interaction with the court. It is trying to understand the legal questions and issues as they relate to your particular situation; identifying the best time to file, or whether or not you should file.  Once those difficult questions are answered then you must prepare the mountains of complex legal paperwork that must be filed in every bankruptcy. No question on the paperwork should be answered without understanding the term and the consequences of any particular answer. These issues are all the practice of law and, by federal and state law, no one except a licensed attorney, experienced in bankruptcy law, can explain them.  The new bankruptcy law has now turned what was a complicated law into a series of mine fields and quick sand holes.  Even the experienced bankruptcy lawyer is unsure of some of the problems raised by the poorly drafted new bankruptcy law. 

If anyone tells you that bankruptcy is simple and they will file one for you for $200 - run, don't walk.  That person is only in the business to take your money.  I guarantee they will leave you in a worse position than if you never filed a bankruptcy.  Also, do not use firms who advertise on TV.  They are paying millions of dollars a year for those ads - where do you think the money comes from pay for them?  Of course, from their clients.  They charge two or three times more than most other lawyers charge for the same services.  Again, they are in the business to make money and mass produce as many files as possible.  That industrial assembly-line process worked well for Ford Motor Company, but does not work for a client needing individual attention.  I do not tell you this in order to scare you into being my client, I say this because I have seen hundreds of examples of horrible abuses by documents preparers and incompetent lawyers suffered on innocent people who were only "trying to save a few bucks" or thought using a TV lawyer was their only option.  This would be like using an untrained, unlicensed person to do open heart surgery in a filthy room with roaches crawling on the instruments.  I know this sounds sick, but I have seen people lose their houses, cars, monies paid to their mothers and even worse.  Get good, one-on-one legal help, do not gamble your financial future.  Call several lawyers and compare their prices, their experience and their commitment to professionalism and their clients.

Self-help in the legal world is not always smart.  You may have tried to take care of your financial situation in ways that the law prohibits.  A year after a payment or transfer a court can set aside the payment or transfer and require that the asset or money be paid to your creditors.  Lack of understanding of the law is not an excuse that the court will accept.  For instances, your mother helps support your family while you are unemployed.  Good news - you are back to work and get a large tax refund.  You pay all the refund to your mother.  A few months later your new company goes out of business.  You finally decide that bankruptcy is the only way to save your marriage and your home.  So you file for bankruptcy.  A couple of months later you receive a copy of a complaint that has been served on your mother - she is being sued for all of the money you paid her.  Yet, had you used the money to pay other expenses (see your lawyer for a list) then you would receive the coveted bankruptcy discharge, get your fresh start and your mother would never have been sued and forced to refinance her home in order to pay the creditors the money you paid to her.  Plus, you can pay your mother back after your bankruptcy is discharged.  The same problem would arise if you sold, transferred or gave away property before filing a bankruptcy, or being sued by a creditor.  I am not making any of this up - the legal issues are called preferential treatment and fraudulent conveyances.

Step 3: Filing of the bankruptcy

A typical consumer bankruptcy filing consists of 40 to 100 pages of paperwork; depending on your situation.  It involves many state laws and federal laws, both bankruptcy and non-bankruptcy.  There are bankruptcy classes required for consumers; tax returns and payroll information which must be file with the court.  Failure to do any of these things will mean the automatic dismissal of your bankruptcy.  A business bankruptcy has mounds of paperwork, strict deadlines and procedures, which if not followed will lead to the bankruptcy being dismissed.

There is little consistency between the laws of various jurisdictions.  Sometimes the state laws or procedural rules within one state differ dramatically from their neighboring state.  Many of the bankruptcy laws vary from state to state and from debtor to debtor. What may seem perfectly reasonable for one debtor may cause another to lose his or her car or bank account. For example, in one state a person can file a bankruptcy and live in a million dollar house while in another state that person could risk their second TV set.

If the forms are not filled out correctly, or if you have failed to properly protect your assets, it may be too late to correct the problems once the documents are filed with the court.  The documents are examined by officials of the court and your creditors - some of whom are representing interests that do not coincide with yours and would like nothing better but to take away assets because you did not protect them properly.

• Once you retain Ms. Drain then all your creditors are required by federal law to stop calling you, but instead they are to call Ms. Drain.

• Ms. Drain and her staff will guide you through the required classes, documents and information gather process.

• Ms. Drain meets personally with every client for at least 3-4 hours before any bankruptcy is filed.  Ms. Drain is always available to answer any questions you may have.  

• There may be issues that must be taken care of before a bankruptcy can be filed, if it can.  All those issues will be clarified and paths designed to deal with each.  If a bankruptcy is not appropriate, then Ms. Drain will assist you with other alternatives.

• Once both you and Ms. Drain have decided the best time for filing your bankruptcy, then our office will take care of filing the documents with the Bankruptcy Court.  You will receive a copy of all documents sent or received by our office.

• At the time of the filing your documents will be assigned a "case number".  That number is important.  You can give that number to any creditors that call.  Technically, from the date of filing all creditors, including the IRS, are prohibited from contacting you.  They are restricted to working directly with your attorney.

• Also, at the time your documents are filed a bankruptcy Trustee will be appointed.  That Trustee's job is to make sure that your documents are complete and review your list of assets for items that are not protected by law.  All of this will be explained during your meetings with Ms. Drain.

• A creditor's meeting will be scheduled and you will receive notice from the Bankruptcy Court and this office as to that date, time and location.  It is absolutely imperative that you attend that meeting.

Step 4: Managing all the paperwork and contacts from your creditors

• Once you have retained our office it becomes our responsibility to guide you through the bankruptcy process, including all of the paperwork and to be the contact for your creditors.  You receive a copy of every document this office receives relating to your case.  You are welcome to call our office at any time to get clarification of the status.

• In a chapter 13 there are many other issues and documents that must be filed, sent to your creditors, reviewed, revised and refiled.  This process takes at least 6-8 months and continues throughout the life of your Plan - three to five years.  See FAQ for Chapter 13.

Step 5: Attending the creditor's meeting.

• You are required to attend this meeting.  Ms. Drain will be with you.

Step 6: Obtaining your Discharge.

• The Discharge is the magic document that every debtor waits for.  In a chapter 7 the discharge usually comes from the Court approximately 4 months after your documents were filed starting your bankruptcy.  In a chapter 13 you will not receive a discharge until after your entire Plan has been completed.

Throughout this entire process our firm's job it to help you understand what is happening and anticipate the next step.  Filing for bankruptcy is not easy, it takes some concerted effort to make sure that all the information is correct.  Using experienced legal counsel will make a difference in the process.

If you are going to file bankruptcy, do it right the first time. Hire an experienced bankruptcy attorney. It is not expensive, and in the long run, you will save money, protect your property, as well as your sanity.  There is no substitute for quality and experience. 

Step 7: How can you find out more information about bankruptcy or get Ms. Drain's help with a bankruptcy?

• Follow the directions at "General Bankruptcy Information"

Quote by James Madison: "There is not a more important and fundamental principle in legislation, than that the ways and means ought always to face the public engagements; that our appropriations should ever go hand in hand with our promises. To say that the United States should be answerable for twenty-five millions of dollars without knowing whether the ways and means can be provided, and without knowing whether those who are to succeed us will think with us on the subject, would be rash and unjustifiable. Sir, in my opinion, it would be hazarding the public faith in a manner contrary to every idea of prudence." --James Madison

USURY: The practice of usury -lending money and accumulating interest on the loan- can be traced back 4,000 years. But it has always been despised, condemned, restricted or banned by moral, ethical, legal or religious entities.


The oldest references to usury are found in religious manuscripts of India, dating back to 2000-1400 BC where the 'usurer' is associated with any interest lender. In the Hindu Sutra (700-100 BC) as well as in the Buddhist Jatakas (600-400 BC) there are many references to the payment of interest, along with expressions of disdain for the practice.

Vasishtha, a prominent lawmaker of the era, drafted a law that banned the high caste Brahmans and Kshatryas from being usurers or money-lenders. In the second century AD, the term usury becomes relative, meaning that interest above the legal rate could not be charged; that would be a usurious loan.