How to go Bankrupt

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Going bankrupt is an option if your debt burden has reached crisis proportion and your stress levels are too high. There is no disgrace in bankruptcy. It simply rescues you from an impossible situation, but it is a last resort and needs to be considered carefully. In essence it is complicated, it costs money and it means you have to go to court.

You Will Need:

A good bankruptcy attorney. Ask your lawyer or friends for a recommendation.
A complete paper picture of your financial situation. List all your debts and show your income.

Step 1

Select a bankruptcy lawyer and make an appointment to see him/her.

Step 2

Discuss the full situation with the lawyer. If you come to the meeting with documented information he will be able to tell you whether bankruptcy is an option and if so what type. If not he will be able to refer you to a financial counselling service where you will be able to work out a repayment schedule with your creditors. You don’t want them to force you into bankruptcy. Most creditors are reasonable if they hear from you and know you have some sort of repayment plan even if the monthly repayments are quite small.

Step 3

If your lawyer suggests bankruptcy, you will have to decide which type you are going to file for. There is Chapter 13 and Chapter 7. In Chapter 13 you will find that some of your debts are discharged but overall you will be required to devise a financial repayment plan for revolving creditors. In the case of Chapter 7 you will find most of your debts are absolved but you will lose items of property like your house and car which will be sold off to repay a portion of the outstanding debt.

Step 4

Under Chapter 13 you will need to come up with a budget. This is a paralegal formality where you will have to outline all your living expenses and then design a repayment package to pay revolving creditors from what is left over. Some debts such as unpaid tax bills can often be written off.

Step 5

You will now have to make an appointment with a credit counselling service, They will look at your budget and then issue a certificate which says that filing for bankruptcy is the only way they see out of the mess.

Step 6

Instruct your attorney to file a motion, which entails a hearing in the bankruptcy court. It costs money to file. Your attorney will tell you of the costs involved.

Step 7

Once a motion has been filed you wait until the Court informs you of a scheduled date for the hearing.

Step 8

Attend the Court hearing. They will go over your budget, recommendations will be made and at the end of the day you will be declared bankrupt. It’s not as bad as it sounds and it’s designed to resolve an untenable situation.

Tip:

Going bankrupt will wreck your credit rating, but this will repair itself in time.

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