Planning to File for Bankruptcy? Here’s What You Need to Do

Bankcruptcy

Bankruptcy is a legal process that allows individuals and businesses to relieve their debts. When a person or company files for bankruptcy, they ask the court to let them discharge (or cancel) their debts. Bankruptcy can be a helpful way to get back on your feet when you’re struggling with debt, but it’s not the only option. If you want to keep your house or car after filing for bankruptcy, you might need to take additional steps before filing, such as changing your loan terms with creditors so that these valuable items aren’t repossessed.

Steps To Take When Filing For Bankruptcy

Filing any bankruptcy can be confusing, but it doesn’t have to be. The sooner you act, the better your chances of getting the protection you need. Here are some steps to keep in mind as you start planning your bankruptcy filing.

1. Talk to a Lawyer

Talking to a bankruptcy lawyer is the first step if you’re considering filing for bankruptcy. Bankruptcy laws are complicated and vary by state, so only an experienced attorney can give you legal advice about your situation. A bankruptcy lawyer in Youngstown will help you identify the different types of bankruptcy that might be available to you and explain how each type works, as well as answer any other questions you might have.

2. Gather Documents

Ensure you gather all the right documents before filing your paperwork with the court. This includes items such as your most recent tax returns, pay stubs from the past two months, proof of any income that isn’t subject to garnishment (like Social Security benefits), a list of all creditors and debt amounts, a copy of your lease or purchase agreement for any property you own, and records of money you’ve borrowed (like your mortgage balance, car loan amount).

Documents

3. Decide Which Type of Bankruptcy is Right For You

Bankruptcy laws are complicated and vary by state. Only an experienced attorney can give you legal advice about your situation. Generally speaking, there are two types of bankruptcies available to consumers: Chapter 7 bankruptcy allows individuals to discharge the most unsecured debt in exchange for giving up some of their assets to be sold so the proceeds can be used to repay creditors. Though not everyone qualifies for this option, it’s often the best choice for people with minimal income who don’t have many assets they need to keep. 

Chapter 13 bankruptcy is less common but can be a good option for people who have an income that allows them to repay at least some of their debt over time. With this option, you’ll make payments directly to the court for either three or five years while creditors are prohibited from trying to collect what you owe them.

Before your debts are discharged, they’ll likely need to be reviewed by the court and by one or more creditors. This process could take anywhere from a few weeks to several months—or even longer in some cases—so it’s important to know how soon you want your bankruptcy case resolved before filing anything with the court. Keep in mind that if you file before meeting with an attorney, you might not be able to get all the help you need.

5. Seek Credit Counseling

If you’re considering bankruptcy, it’s a good idea to talk with a credit counselor first. Credit counselors are trained professionals who can provide free advice about debt management, budgeting, and ways to avoid bankruptcy. They might be able to help you develop a plan that allows you to keep some of your assets while still getting the relief you need from debts. This could include setting up a repayment plan or negotiating more favorable terms with creditors.

6. Think About Your Financial Future Goals

Sure, it’s understandable that you’re struggling with your debt load right now. But bankruptcy can be a fresh start—and one of the first steps to rebuilding your finances for the future is to be as prepared as possible when filing. Things like getting pre-approved for new credit cards and having your personal information removed from data brokers can give you more control over your financial life in the years leading up to and after filing for bankruptcy protection. Hence, before you file, take some time to think about your financial goals for the future and whether bankruptcy is the best way to achieve them. If it’s not, there are other options available, like Debt Settlement or Debt Consolidation.

Filing for bankruptcy is a big decision that should not be taken lightly. However, it can be a helpful way to get back on your feet when you’re struggling with debt, but it’s not the only option. But if you’re feeling overwhelmed by your debt and don’t see any other way out, it might be the best option for you. By following the steps above, you’ll be well on your way to getting relief from your debts and starting fresh.|

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.