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Filing Bankruptcy

Let us start with first things first. Do you really need to file bankruptcy? Bankruptcy should only be used as a last resort. Bankruptcy should only be considered when there is no other alternative such as credit counseling and debt consolidation. Furthermore, if you are in a situation where you have no real assets or income, bankruptcy is probably not for you because you are considered “judgment proof”. Before even considering bankruptcy, you should take a good, hard look at your finances, debts and if bankruptcy is your option.

After you have determined that bankruptcy is your only option, you should determine whether a chapter 7 or a chapter 13 bankruptcy suits your needs. These two are extremely different and should be considered carefully. Once you have made this decision it is time to get the ball rolling.

Do I have to hire an attorney?

Actually, no, you can go through a bankruptcy on your own without having to hire an attorney. Having an attorney is not a requirement by law when filing bankruptcy, if you are a sole proprietor or an individual. A corporation, however, is required to have an attorney during bankruptcy proceedings. While you may not be required to hire an attorney, it is a good idea to at least consult with one. He or she will help you determine if bankruptcy is truly your only option and that you are taking the appropriate steps in filing. Bankruptcy can be confusing with all of the different documentation required. An attorney can help you in this area as well.

If you choose to act on your own behalf, the court system will be able to provide you with an information packet cantaining everything you need.

When filing for bankruptcy a few steps must be followed:

Step One: Filing a bankruptcy petition. This includes schedules of debt, property, budget, statement of finance, business assets and debts.

Step Two: Credit Counseling. As of October 2005, most of those people filing bankruptcy are required to undergo credit counseling under the Bankruptcy Abuse Prevention and Consumer Protection Act.

Step Three: After filing with the courts, mail a notice to each of your creditors notifying them of your bankruptcy filing. This ensures that the creditors are aware of your actions and protects you from further collection activities. This includes liens, repossession, foreclosure and any contact whatsoever.

Step Four: You will have to attend (with or without your attorney) what is called a meeting of creditors. This works to identify issues with the creditors in regards to the debt and the bankruptcy.

Step Five: Final Discharge. This will be the moment when your debts that were listed in the bankruptcy case are null and void. It is important to understand that the bankruptcy will be placed on your credit report and remain there for seven to ten years.

You can expect the whole bankruptcy procedure to take a minimum of 90 days from the day of filing the petition.

Bankruptcy Alternatives
Some of the alternatives to bankruptcy are:...
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