First Steps to Take Before Filing for Bankruptcy

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Filing for chapter 7 or chapter 13 bankruptcy is a big decision that will profoundly affect your life for many years. It’s not a decision you should take lightly, and you must put a lot of thought, planning, and research into what bankruptcy is and what steps to take before filing. To help you make an informed decision, here are five essential steps you should take before filing for bankruptcy.

Understanding What Bankruptcy Can do For You

Bankruptcy is a legal process that allows individuals and businesses to be relieved of debt under certain circumstances. There are several different types of bankruptcy, each with its own rules and regulations. Bankruptcy can help individuals and businesses get out-from-under crushing debt, and it can allow them to start over with a clean financial slate.

Take a Close Look at Your Finances

Before you even consider filing for bankruptcy, it’s essential that you take a close look at your finances. You need to look closely at all your debts and where your money is going. Not all debt can be discharged by filing for chapter 7 or chapter 13 bankruptcy, so it’s important to understand what debts you can discharge and which ones you’ll still have to pay.

Decide Which Type of Bankruptcy is Best for Your Situation

The two common types of bankruptcy for individuals are chapter 7 and chapter 13. Each type of bankruptcy has its pros and cons, along with different steps and outcomes. It’s vital that you understand which type of bankruptcy best suits your needs.

Chapter 13 bankruptcy is a type of legal process that allows individuals to get relief from debt by creating a repayment plan. Individuals who qualify for chapter 13 bankruptcy typically have significant amounts of debt, as well as the ability to make regular payments towards repaying their debts over time. This type of bankruptcy may be a good option for individuals who have struggled with debt in the past, but who are now able to take control of their finances and manage their debts responsibly

Chapter 7 bankruptcy is a type of legal process that allows individuals to be relieved of some or all of their debts under certain circumstances. This type of bankruptcy can provide relief from crushing debt for individuals who are struggling with financial difficulties and have limited income or assets. However, not all debts can be discharged through chapter 7 bankruptcy so it’s ideal to consult with a professional about your situation before filing. To qualify for chapter 7 bankruptcy, individuals must typically have significant amounts of debt that they are unable to repay, as well as limited income and assets. In order to determine eligibility, individuals will typically need to meet certain financial requirements and complete a mandatory credit counseling course prior to filing.

Consider Hiring an Attorney

While it may seem like another expense, hiring a bankruptcy attorney can save you time, headaches, and money. Law firms like Knollmeyer Law Office PA that have attorneys specifically for bankruptcy are ideal. These types of attorneys can make the bankruptcy process easier by avoiding expensive and fraudulent mistakes, submitting all paperwork to the court promptly and efficiently, and guiding you on which type of bankruptcy is best for your situation.

The Bankruptcy process is a serious legal procedure with long-term legal and financial consequences. If you can’t afford a bankruptcy attorney to handle the entire process, consult with one regularly for advice and counseling on the legal intricacies of filing for bankruptcy.

Take a Credit Counseling Course

Attending a credit counseling course is part of the bankruptcy process you must complete. In most cases, you won’t be able to file for bankruptcy until you complete a credit counseling course, so it’s crucial to find out when and where a course is available in your area and how much it costs.

Decide if you want to keep your car or home

When considering whether to keep your car or home while going through bankruptcy, it is important to understand the pros and cons of each option. On the one hand, keeping your car may allow you to continue going to work and taking care of other important responsibilities, which can help you manage your debts more effectively over time. However, this may also affect the terms of your bankruptcy.

Start living on a budget and saving money

To start living on a budget and saving money, it is important to take a close look at your finances. This means tracking your spending, identifying areas where you can cut back, and setting goals for how much you want to save each month. To make this process easier, consider using tools like online budgeting software or apps that can help.

Stop using credit cards and start paying off your debts

To stop using credit cards and start paying off your debts, you will need to make some major changes to your spending habits. One of the first steps is to cut up all of your existing credit cards and refrain from opening any new accounts. Additionally, it is important to create a realistic budget that takes into account all of your expenses, including things like gas, groceries and the occasional date night.

File for Bankruptcy

Once you’ve completed the necessary paperwork and other filing requirements, you can file for bankruptcy in court.

Filing for bankruptcy isn’t the end of your life. It can give you a fresh start and the opportunity to rebuild your credit history. Hiring a bankruptcy attorney is the best way to ensure your bankruptcy is handled correctly according to legal requirements and in a timely manner.