Knowing When to File for Bankruptcy

bankruptcy filing petition and a court gavel
Knowing when to file bankruptcy can be tricky. When facing bankruptcy, a debtor may feel isolated and alone, but the important thing to remember is that they most certainly are not! In 2013 alone, there were 333,626 Chapter 13 bankruptcies filed and 728,833 Chapter 7 bankruptcies filed in the U.S.

Some debtors may not know how to file bankruptcy, or where to go for bankruptcy help. Others may be worried about how their credit will look after bankruptcy. It takes 10 years for a Chapter 7 bankruptcy to no longer appear on a credit report, after all. Fortunately, consulting with a local bankruptcy attorney will certainly help with filing bankruptcy.

The first thing to find out is when to file bankruptcy. To determine if the time has come, the debtor must do two things. First, he or she must take inventory of all their assets. This includes real estate, vehicles, bank accounts, stocks, and bonds. Once a number is assigned to these things, they must then collect all bills and credit statements to determine how much money is owed. If the amount owed is greater than the amount of assets, it may be time to file bankruptcy.

When filing bankruptcy, it helps to know the difference between Chapter 7 and 13 bankruptcies. An attorney will be able to help the debtor determine what is the best option for them and their family. In Chapter 7 bankruptcy, the debtor’s assets are often liquidated and the cash from the sales is given to the creditors. With Chapter 13, the debtor and creditor agree on a repayment plan, and the debtor is able to keep their property.

Consulting a local bankruptcy attorney is often the first action for a person facing bankruptcy. The attorney will be able to help the debtor decide when to file bankruptcy. Attorneys also assist in the filing of paperwork to eliminate costly errors, and may be able to establish if the debtor is eligible to have filing fees waived. Many debtors who file bankruptcy without the assistance of an attorney inadvertently get their cases thrown out due to avoidable mistakes on the paperwork.

If you are facing bankruptcy, remember these simple steps. First, determine if it is necessary to file, or if you have other options. Second, talk to your attorney to find out what type of bankruptcy is best for you. Third, remember that you are not alone, and that bankruptcy is not the end of the world. With a good attorney and a healthy support system, you will be able to take control of your life and finances soon.