If you’re feeling overwhelmed with your debt, the first thing you should do is obtain bankruptcy help from either a chapter 11 bankruptcy attorney, a chapter 13 bankruptcy attorney, or a chapter 7 bankruptcy attorney. These are the different kinds of bankruptcy that are available to you depending on your situation. If you are already looking into how to file for bankruptcy, then these steps should help you in doing so.
How to File for Bankruptcy
Before you actually file, there are several things you should think about:
- Analyze your Debt
This is the first step. Keep in mind, some kinds of debt cannot be dismissed even with a bankruptcy. If you have already tried to contact those you owe money to in order to negotiate lower payments or a settlement and you still feel that bankruptcy is the only option, here is how you can make sure of that. Find out what kind of debt cannot be discharged, and then take the debt that would be able to file for bankruptcy and add it up. Next, add up your assets. If your debt outweighs your assets then bankruptcy just might be an option for you.
- Consider your Cosigners
If you have had a cosigner for any debt, bankruptcy will not erase the debt for them. Even if you file for bankruptcy, the cosigner may still be responsible for that debt. Look into this, and talk with your cosigners before making any final decisions.
- Understand Bankruptcy
There are different kinds of bankruptcy depending on various different factors.
- Chapter 7 liquidates all assets in order to pay off debt.
- Chapter 13 provides you with a repayment plan, so you can pay off debt within five years.
- Chapter 11 gives you time to reorganize your assets, but leaves you responsible for part of the debt.
- Chapter 9 is similar to Chapter 11, except it’s for districts and towns rather than businesses.
- Chapter 12 is similar to chapter 13, except it is only for businesses in which more than 80% of the debt is from a farm or fishery.
>Try not to think about the burden of debt being lifted at this moment in time. Think about the future and evaluate whether the bankruptcy will actually help you as you’re looking into how to file for bankruptcy. Remember that bankruptcy has a very hard impact on your credit and can last for up to 10 years depending on the type of bankruptcy you file for.
How to Actually File
- Once you have completed these preliminary steps the next thing to do is to find out if you actually qualify.
- If you do qualify, you will need to fill out the bankruptcy forms, list all of your assets, and list all of your debt.
- Now comes the time to file the forms. Your attorney can file the forms for you to ensure they are done correctly.
- At this point in the process the court will assign a trustee to you. This person will work on behalf of the creditors.
- During the waiting process after filing the bankruptcy forms, you will be required to receive credit and debt counseling.
- Your part in the process is now finished. It is up to the courts to complete the bankruptcy from that point on. Now it is your responsibility to begin building again.
Bankruptcy, while potentially devastating, can also be a clean slate for most people. Medical bills alone accounted for 2 million cases of bankruptcy in 2013. If you feel that you’ve been given a new start because of the option of bankruptcy, don’t take it for granted. Apply what you learned in counseling and begin to change your habits and financial techniques in order to avoid falling into the same position again. Part of the problem with bankruptcy is that once the 10 years is over, people tend to view it as an option for the future should they get in over their heads again.