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Bankruptcy provides a legal means to get a financial fresh start. If you are overwhelmed by debt, you may be thinking about filing for bankruptcy. Bankruptcy has serious consequences on your credit rating, however, so the decision should be made carefully. The information included on this page can help you determine how to know when to file for bankruptcy.
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Being Ready for Bankruptcy
The attorney on this video that discusses indicators that someone is not ready to file for bankruptcy. If a prospective client asks questions that indicate they are not willing to disclose all the assets or assets, or wants to keep their spouse out of the situation. He points out that you can't do a partial bankruptcy- its a serious process and if you withhold any information you could be charged with a felony.
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Introduction
- Bankruptcy stays on your credit report for up to 10 years; it is not a step to be done until all other avenues are exhausted. You'll want to understand what happens when you declare bankruptcy, and seek professional advice before beginning the process.
Step 1: What is Bankruptcy?
- Bankruptcy is a legal process, managed in federal court, that allows you to cancel or restructure your debts. When you declare bankruptcy, you go to court to obtain protection from creditors.
- A Chapter 7 bankruptcy, requires you to sell your assets, with the exception of some personal items and a state specific exemption, and use the proceeds to repay your creditors. Debts that can't be repaid are discharged.
- A Chapter 13 bankruptcy imposes a repayment plan that modifies the terms of your existing debt, and specifies minimum payments that must be kept current.
Step 2: Signs That Bankruptcy Might be an Option
- Although you'll make the final decision with expert advice, some indications that bankruptcy may be a good option for you are:
- You have a large number of unpaid bills, and no way to pay them.
- You own assets that may be seized by creditors.
- You have a job with wages that may be attached by companies you owe money to.
Step 3: Talk to A Credit Counselor
- You are required by law to seek pre-filing credit counseling with an approved Department of Justice credit counselor before filing for bankruptcy. They will work with you to develop a repayment plan that you can have accepted by your creditors without going to court.
Step 4: Meet With a Bankruptcy Attorney
- Most bankruptcy attorneys will have an initial meeting with you, free of charge, to assess your case. They will be able to advise you whether bankruptcy is a good option for you, and whether Chapter 7 or Chapter 13 would be more appropriate for your situation.
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