How To File For Bankruptcy
Bankruptcy advice if filing is your only option
Filing for bankruptcy in the United States requires an individual to file under laws that are colloquially known as "Chapter 7" and "Chapter 13" bankruptcy. The process of how to file for bankruptcy depends on whether you will be filing under Chapter 7 or Chapter 13 laws.
Regardless of which option you are pursuing, the help of bankruptcy lawyers can help you protect certain assets, if possible under the law. You should always seek professional bankruptcy advice before filing for bankruptcy to ensure you emerge from the proceedings in the best possible financial shape.
Chapter 7 vs. Chapter 13 Bankruptcy
The functional difference between Chapter 7 and Chapter 13 bankruptcy law is that in a Chapter 7 filing, you are not declaring any assets to protect, and your assets will be liquidated so your creditors can be partially paid off. In Chapter 13, you are using asset exemption laws to protect certain pieces of property from being sold off to creditors. These pieces of property, as well as your future earnings, can be used to pay off creditors. Essentially, a Chapter 13 bankruptcy filing is a restructuring of your debt. Bankruptcy lawyers are strongly recommended if you are filing for Chapter 13, as this process is complex and requires expert legal help.
Filing for Bankruptcy
You can file for bankruptcy online on your own, or retain the help of bankruptcy lawyers to file your paperwork for you. There are fees involved, unless you can be exempted from them by proving you are unable to pay them. Whether you file through an attorney or online, here's what you need to know:
- If creditors continue to contact you after you've filed, you should send them to your attorney or let them know that you have filed for bankruptcy.
- Prepare for a meeting with your creditors. This is an essential part of the process, in which you acknowledge your understanding of the situation and swear by the truthfulness of all statements you've made.
- Avoid using your credit cards if you are preparing a bankruptcy claim. It will look very bad if you continue to rack up debt when you know you're not able to pay for your purchases or cash advances.
- Wait for 60 days to see if any legal claims are filed by your creditors.
If no legal claims are filed, then your bankruptcy petition is considered complete. Note that it will remain on your credit profile for up to 10 years, so be sure there are absolutely no other alternatives before you commit to filing for bankruptcy.