With all of the living costs involved in day-to-day life, it is unfortunately easy to fall into financial pitfalls. When they get to the point where it seems impossible for you to pay back any of your debt, it can sometimes be a smart decision to file for bankruptcy.
However, bankruptcy claims are a complicated process that can have consequences when not handled properly. The first step in these cases should always to be to ensure you have a good understanding of how to file for bankruptcy. So what do you really need to know?:
- Assess your financial situation: Ask yourself some questions that might indicate that you won’t be getting yourself out of debt on your own. Such as, do you use credit cards to pay for necessities? Are you being contacted by bill collectors? Do you know how much you actually owe?
The answers to these questions can show if you are already in deep water and whether you still rely on funds you don’t have. If so, you should probably be looking into how to file for bankruptcy.
- Determine debt: Especially if you answered yes to the last question of assessing your situation, it’s important to itemize how much you owe and who to. This is essential because there are some forms of debt that cannot be erased by any of the different types of bankruptcy.
For example: alimony, child support, and debts that have occurred after the initial bankruptcy filing cannot be erased. An example of debt that can be erased is unpaid medical bills, which actually affected an estimated 2 million people in the United States in 2013.
- Different forms of bankruptcy: There are multiple types of bankruptcies that each offer their own pros and cons. Some versions, like a chapter 7 bankruptcy, can be more beneficial for independents but will stay on your credit report for up to 10 years, while a chapter 11 bankruptcy could be the best option for a business looking to reorganize.
This all sounds complex but seeking out bankruptcy help from an attorney could greatly help you understand how to file for bankruptcy. And with an estimated 1,071,932 bankruptcy filings in the U.S. just in 2013, you are far from being alone in the need for help filing bankruptcy.