Bankruptcy is sometimes viewed as a quick way to get out of debt, get creditors off your back and wipe the slate clean to start again. Unfortunately it is not as easy as it sounds and is also a costly process in itself. Knowing how to claim bankruptcy involves doing some research into the debts you have, the money you earn and the laws surrounding bankruptcy.
Before taking a step towards bankruptcy ensure you have fully explored all other options and enlisted the help of a professional for money and budgeting advice. If there is any way your debt can be repaid on your current earnings not only would it be better for you in the long term but a request especially for personal bankruptcy will likely be declined. It is important to get professional bankruptcy assistance if you can’t file bankruptcy yourself through online bankruptcy.
Filing for bankruptcy will effectively give you a clean slate however the long term affects need serious consideration. Future purchases on credit will probably not be possible, applying for personal or car loans, mortgages, grants, credit cards and also opening bank accounts will be extremely difficult if not impossible. The social stigma attached to bankruptcy is unfortunate but also a reality to take into consideration. Often credit checks can be a part of the employment process so this is something that could affect future employment or advancement. It is also worth mentioning that certain debts cannot be wiped by bankruptcy, like government tax. These are all very good reasons why all options need to be explored thoroughly before considering bankruptcy. If you happen to know anyone that has been in this position their advice on how to claim bankruptcy and its pitfalls could be extremely valuable.
If bankruptcy is indeed your last resort and only option then the first step is to decide which type of bankruptcy you need to file for, with the help of a good lawyer. This will likely be Chapter 7 which liquidates all your assets and gives you a clean slate financially. The other most common form of bankruptcy is Chapter 13 which basically enforces an achievable repayment schedule; this is becoming a more preferred method within the industry and holds people more accountable for their debt.
Filing for bankruptcy can be costly; a bankruptcy or debt lawyer alone will usually charge a flat fee or an amount based on the outstanding debt. Bankruptcy attorney fees vary greatly but you could be looking at around $2000 for this. Doing your own research before hand on how to claim bankruptcy can sometimes reduce the time you require the lawyer for so be prepared.
You will then need to make a clear list of all your assets and debts which will be used in a meeting with you, your lawyer and the creditors seeking repayments from you. You are required to confirm your financial position under oath. The court will then decide what assets will be sold to repay what debts, in some cases the amount of debt is larger than what the assets can clear. This is why most people end up filing for Chapter 7. Otherwise the court will decide on a suitable repayment plan and term – under Chapter 13. In this case, you may need the assistance of a chapter 13 attorney to help you out.
About 60 days after this meeting has taken place you will receive a notification of discharge, meaning you no longer have obligation to pay the mentioned debt. However the case can be further drawn out if one of your creditors files a lawsuit to challenge the discharge of your debt with them.
Once you have begun proceedings to file for any type of bankruptcy ensure you think twice before making any purchases at all. Even small purchases made with your credit card will be very much frowned upon during proceedings, not to mention applying for or obtaining further debt with the knowledge it could be possibly wiped clean. These sorts of actions will almost certainly give the court reason to decline your request. When thinking about how to claim bankruptcy, ensure you have taken all this under serious consideration first.
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