You have no doubt heard terms like “bankruptcy” and “foreclosure” thrown around plenty, especially in these times of economic hardship. Bankruptcy — in its various forms — is a way for consumers to receive financial relief in the face of overwhelming debts. This process will wipe away some, it not all, of your debts and give you a fresh financial start.
Even though you probably know the general idea behind bankruptcy, you might be left wondering: How do you file for bankruptcy?
The following are a few general steps you might consider taking in order to utilize this invaluable financial tool.
Exhausting All Other Options
Most financial experts will warn you that with bankruptcy comes a devastating blow to your credit score. While this hit is temporary, it will make obtaining lines of credit difficult in the future. This means that you might have to put off big purchases like a home or vehicle, because you may not qualify for the funding.
For this reason, bankruptcy is often referred to as “the last resort”. Make sure that there are no other ways to dig out of your financial hole. Sometimes, financial counseling or debt consolidation may provide you with the help you need to get your affairs in order. If not, it’s important to know: How do you file for bankruptcy?
Seek Legal Help
When you have exhausted all options, your first step should be hiring legal counsel. Filing for bankruptcy is a complicated process, and one that you do not want to take on by yourself. It is not impossible to go through the proceedings yourself, but when you do, you run the huge risk of overlooking a small detail, which can jeopardize your entire case.
Research local legal firms which specialize in bankruptcy. Also, check to see if you qualify for any programs which offer free legal aid.
Budget Accordingly
Ironically, filing for bankruptcy is not free. Various fees are tied in. Make sure that you have enough money to cover these expenses so that you can move forward with the case as planned.
Initiate The Bankruptcy
With your lawyer, you will decide which type of bankruptcy to apply for. You will have to appear in court and fill out paperwork, including a means test. Be prepared to be honest and forthright with the bankruptcy trustee. Lying about your financial system will bring only negative repercussions. The court will demand to know everything about your financial life.
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