Filing for Bankruptcy? Here Are 5 Things You Need to Know

Monday, July 29, 2013, 1:00 AM | Leave Comment

One of the most important financial decisions a family or individual may ever make, will be the decision to file for bankruptcy. This drastic method of dealing with significant debt requires thought and consideration before a choice can be made. The reasons why someone might want to consider bankruptcy often include having a significant amount of debt that cannot be paid down by the debtor.

Types of debt may include credit card bills, unsecured loans, and medical bills. Getting daily calls from bill collectors or having civil lawsuits filed against a person may also influence the decision to file for bankruptcy.

filing for bankruptcy here are 5 things you need to know

It is important to consider the following before filing for bankruptcy:

  1. Examine all credit reports and current finances

    Each year everyone may obtain a free credit report from each of the 3 major credit-reporting agencies. It is essential to examine these documents and understand the total debt owed by an individual or family. It is also important to write down all current expenses and income so as to help with making the overall bankruptcy process faster.

  2. Understand different types of bankruptcy

    A few years ago Congress tightened the rules regarding bankruptcy filings. These new rules have meant that some people who would have filed for Chapter 7 bankruptcy would now be made to file for Chapter 13 bankruptcy instead. Chapter 7 allows for a liquidation of assets while Chapter 13 requires an adjustment of debt and entails future payments. If you need questions answered regarding the different types of bankruptcy you can contact a local lawyer by doing an internet search like “Chaper 7 Attorney Sacramento”.

  3. Call all creditors or debt collectors

    Once the decision has been made to file for bankruptcy, by law all creditors must cease collections activity. Calling each creditor should result in a stop to all debt collection communications.

  4. Choose an attorney for filing

    There are lawyers who specialize in bankruptcy filings, and locating a local attorney with bankruptcy experience is vital for a swift proceeding. Shopping around for the best lawyer is advisable. Meeting with more than one attorney before making a final decision on representation is recommended.

  5. Undergo credit counseling

    To file successfully for bankruptcy, an individual must undergo official credit counseling. The United States Department of Justice offers a listing of approved organizations, which may provide credit counseling before and during the bankruptcy process.

Bankruptcy is a difficult process, but it is aided greatly through preparation and research before the process begins. Remaining in bankruptcy any longer than is necessary may lead to unnecessary stress, so preparing well before filing is advisable.

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