If you have found yourself spiraling into debts and have reached the point where your outgoing amounts in debt repayments are more than the amount of money you have incoming every month, filing for bankruptcy may be your only remaining option. This can be a very stressful situation and you will get a lot of conflicting advise about exactly how to claim bankruptcy. The best thing you can do is seek professional help.
Before you begin
First be aware that declaring yourself bankrupt is a last resort that should only be considered once you follow all other options available to you. It may be tempting to take the ‘easy option’ of wiping your debts away and starting with a clean slate but once you’ve made the decision to become bankrupt and started the process you may be relinquished of your assets, your financial problems will become public knowledge and you will find it very difficult in the future to get credit.
You should first consult with an independent financial advisor or credit counselor who may suggest other options available to you that you have not considered and will fully explain the impact that bankruptcy will have on your life. They can help you develop a budget that reduces monthly spending and allows you to begin to reduce your debts.
The bankruptcy process
It is recommended that you hire a lawyer to start the process. It is possible to file for bankruptcy without one, but it can be stressful and confusing. Your lawyer will advise you on the type of bankruptcy you should file and answer any questions you have about the process. After hiring a lawyer, all creditors can be directed to your attorney, which can reduce the pressure on you and your family.
Your lawyer will help you to build up a list of all your assets, liabilities and any related business affairs, which will be turned over to the court where you file your petition. They will also arrange a meeting with your creditors to state your reasons for bankruptcy and show that you agree to file the petition.
After this, your assets will usually be liquidated and used to pay back your creditors in part. In some cases your assets will be classed as exempt and you will not have to make any payments or you may be required to pay creditors back as much as you are able over a 3 to 5 year plan.
The 60th day after the meeting with creditors you will receive notification that your debt has been discharged. Depending on the decision of the court you may not be relieved of all debt such as student loans and certain taxes. You will also need to pay your lawyer and your legal fees after the process.
For more detailed advice regarding your situation it is advised that you contact a credit counselor or financial advisor to assess your situation before proceeding with a bankruptcy claim.