You need to think about filling for bankruptcy if you are accruing large bills, overdue credit card debts and other unexpected liabilities.
Be aware that your credit report will show your bankruptcy for almost 10 years. If you think that filing for bankruptcy is the right thing to do in your situation, read this guide on how to file for bankruptcy.
There are requirements before you file for bankruptcy.
First, you need to receive pre-credit counseling from one of the government approved agencies. This should be done 180 days prior to filing for bankruptcy. Typically, the counseling lasts for only an hour or even up to two hours. Your monetary condition and alternatives to bankruptcy will be discussed.
Furthermore, your personal budget plan is talked over. This credit counseling usually costs $50 or more but can be free for those who really cannot afford it.
You just have to get a waiver beforehand. After your pre-bankruptcy credit counseling class, you will get a certificate as a proof. It should be noted that bankruptcy is generally a last resort, and should only be done after a debt management plan or other option falls through.
Next, if the counseling does not offer other alternatives, you can begin the bankruptcy filing process. You can choose to represent yourself in court or you can ask the help of a lawyer. You have to remember that bankruptcy rules are especially technical. If you fail to file a necessary document or if you make a mistake, it may have an effect on the outcome of your case.
You can lose some of your rights or your bankruptcy case might even be dismissed.
To make things easier, a bankruptcy petition preparer can be hired to arrange the necessary documents. They will assist you in filing your bankruptcy forms. It is important to know that these individuals are not lawyers.
They are not allowed to give any legal advice regarding your bankruptcy. They also cannot teach you how to answer questions and represent you in court.
Your job is to organize all your financial papers which include all of your debts, bank statements, tax returns, auto loans, copies of mortgages and even paycheck stubs.
All your properties and all your debts should be listed properly in your bankruptcy schedules. Make sure that you list everything so that the judge will not dismiss your case. If you lie or falsify a record, there is a huge possibility that your debts will not be discharged.
There are still a couple things to be done after filing for bankruptcy. A court-appointed trustee will be assigned to you to decide if your assets can be sold to pay your creditors.
They have the legal right to take your assets and sell them and later on distribute the income to your creditors. Of course, you can save some of your assets by asking for exemption. One of the lasts things that you need to do is finish an approved debtor education.
Like the pre-bankruptcy counseling, you can attend one for free if you request a waiver in advance. Finally, the last step is to join a Meeting of Creditors.
Your bankruptcy will be complete and your debts will be discharged if you properly comply with all the bankruptcy requirements and rules.