Bankruptcy is a complex legal process and requires detailed planning. Even a small mistake can be costly. Planning is very important when you file for bankruptcy. Bankruptcy is essentially a legal procedure aimed at helping those who are unable to repay their debts to discharge their debts and make a new financial start in life. Choosing the Right Chapter Individual debtors typically file for bankruptcy under Chapter 7 or Chapter 13. Chapter 7 is a liquidation process. in which the debtor's assets are liquidated by the bankruptcy trustee to repay creditors. In Chapter 13, the debtor makes payments according to the payment plan approved by the creditors. In chapter 13, debtors retain possession of their property. You should seek bankruptcy legal advice from an experienced bankruptcy attorney to determine which of the two chapters is best for you. Chapter 12 bankruptcy is very similar to Chapter 13, but it has a higher debt limit and applies to agricultural operations. To file for Chapter 12 bankruptcy, you must meet the definition of a family farmer. Means Testing The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) introduced means testing as criteria for filing Chapter 7. Debtors who do not meet the means test may be eligible to file under Chapter 13. If you are considering bankruptcy, seek bankruptcy legal advice from an experienced bankruptcy attorney. The law now requires individuals considering filing for bankruptcy to undergo pre-bankruptcy credit counseling from a government-approved agency within 180 days before filing. Automatic Stay When you file for Chapter 7 or Chapter 13 bankruptcy, an automatic stay goes into effect by law. When the stay is in operation... middle of papers ...... owner or a utility company, or a company in which you have invested money. Property that you have the legal right to receive but which you have not yet acquired at the time of your declaration of bankruptcy is included in your bankruptcy estate. Although for tax purposes the bankruptcy estate is a separate entity, it is taxed in the same way as an individual. Like an individual, the bankruptcy estate can also benefit from deductions. Generally, the tax law allows the bankruptcy estate to claim deductions for administrative costs of the bankruptcy estate. Attorney fees and fees paid to other professionals by the bankruptcy estate are generally considered administrative costs and therefore tax deductible. A bankruptcy estate can carry forward or carry forward these deductions, but when the bankruptcy estate ends, you cannot carry forward the unused deduction on your personal tax returns..