Filing for Bankruptcy? A Step-by-Step Guide

If you are planning on filing for bankruptcy, there are a number of steps that you will need to complete. If you successfully complete the process, you will be able to take control of your debt situation or completely eliminate it. Here are the basics of how to file for bankruptcy.

Choose a Type

The first thing that you will need to do is choose which type of bankruptcy that you plan on filing for. There are 2 main types of bankruptcy that most people use. These types are Chapter 7 and Chapter 13. Chapter 7 is known as the liquidation bankruptcy. With this type of bankruptcy, you will be able to discharge your debt so that you do not have to pay it any longer. With Chapter 13, you will be going through a reorganization and coming up with a plan to repay your debt.

Chapter 7 is the most sought after form of bankruptcy because it eliminates your debt. However, not everyone is eligible for it. You have to meet income requirements or pass a discretionary income test in order to qualify for Chapter 7. If you do not qualify for Chapter 7, you can file for Chapter 13 in most cases.

Hire a Lawyer

Although you could potentially file for bankruptcy on your own, hiring a lawyer will usually be the best decision. They can provide you with experience in the matter that you are lacking. They will help you fill out the necessary paperwork, meet the deadlines, and walk you through the entire process. They can also be beneficial when trying to decide which type of bankruptcy to file. You want to hire an attorney that specializes in bankruptcies instead of some other type of attorney for this process.

Documents

Once you have hired legal representation, you will need to go to the courthouse and get the appropriate documents. You will have to fill out a petition that says you are filing for bankruptcy. You will also have to gather your financial documents together that detail every aspect of your life. You will have to show how much income you make, how much debt you have, and what you have in the way of assets. You will have to detail all of this information on the appropriate bankruptcy forms with your court system.

Credit Counseling

Most states will require you to complete credit counseling before you are eligible to move forward with your bankruptcy. This will have to be done with a certified credit counseling agency. You will have to provide proof to the court system that you attended the counseling session.

Bankruptcy Trustee

With both types of bankruptcy you will have to work with a trustee. With Chapter 7, they will determine what assets you have and liquidate some of them to repay your creditors. With Chapter 13, the trustee will oversee your repayment plan.

Discharge

If you are using Chapter 7, the judge will then discharge your debt. This means that you no longer owe the debt that was discharged and creditors cannot attempt to collect it from you any longer.

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