Filing for bankruptcy is a difficult decision. If you are currently dealing with a large amount of debt and are not sure how to pay it all off, this may be the best option for you. However, before you dive right into filing for bankruptcy, it is essential that you know the steps that should be taken when filing and receive the support and guidance from a professional attorney. If you don’t take these important steps, your bankruptcy filing may be rejected or delayed, which can drag the process on much longer than necessary.
Hire an Attorney
When filing for bankruptcy, a bankruptcy attorney is an absolute must-have. Without an attorney, you will have to go through the process of dealing with creditors on your own, which will surely be difficult. Your attorney will be able to help you choose which chapter to file for bankruptcy, which will ultimately depend upon your current situation at hands. There are many different attorneys that specialize in bankruptcy. You will need to do a search of the attorneys in your area who will be able to help you with this ordeal.
There are some people who live out certain significant parts of their income and assets to ensure that they will qualify to file for bankruptcy. However, this is being dishonest and can result in a world of trouble for you, along with your bankruptcy case being dismissed. Be honest about everything from the very beginning. Speak with your attorney about your income, assets, and the debt you have accrued over the years. Tell the truth because that is the best way for you to get the help you need.
Gather Your Paperwork
Always make sure that you have all paperwork compiled together and sorted correctly. You will need to have proof of your income, list of dependents in the home, list of any cars you own, car loans that you have taken out, and a list of the creditors that you owe money to. All of this paperwork is needed when filing for bankruptcy. While it is a lot of paperwork, your attorney will be able to help you sort through it all to ensure the overall best outcome in the situation.
Your attorney should explain the process to you and it is important that you understand bankruptcy before you file. This is something that will appear on your credit report for around 7 years. You may have a hard time applying for different things if those things require a credit check. However, if your credit score is already damaged as it is, bankruptcy would be able to help you fix that credit score over a period of time. Your credit score is not instantly returned back to normal and it is something you will have to work on over the years. Most creditors will not be willing to give you a credit card because they will be able to see that you were unable to pay off your credit debt before. However, this may be a good thing for the most part, especially since you are going to want to avoid building anymore debt.
Bankruptcy is just one option if you are dealing with too much debt to afford and it’s often the most painful one. There are debt consolidation programs, but if you are in over your head, bankruptcy may be necessary. Sometimes it’s important to think of it as the nuclear option, given the impact it has on your credit, and one that should be considered almost as a last resort. It can also be a psychologically and emotionally challenging time so while an attorney is valuable, be sure to build up a good support structure around you to help you through this difficult time.
About the Author: Anna Hicks is a freelance writer who is normally writing on the topics of business and finance. Anna has been reading and writing on personal finance for years and likes to use her knowledge in practical applications for everyday readers. You can read more finance writing by Anna at PaidTwice.com.