In technical terms, bankruptcy is defined as a legally declared inability of an individual or business to pay its creditors. Bankruptcy can either be involuntary (initiated by creditors) or voluntary, which means that it’s initiated by the debtor. In the United States the two most common types of bankruptcy are referred to as Chapter 7 and Chapter 13. Without a doubt, Chapter 7 is the most common form of bankruptcy filed, likely because it allows the debtor to completely eliminate large portions of their debt over a relatively quick time period. Of course, claiming bankruptcy is not all positive. There are a number of consequences that must be carefully considered before you make a firm commitment to move forward with a bankruptcy claim.
If you’re like most people then you’re probably wondering how to go bankrupt, and you’re probably also a bit confused and perhaps even a little scared about the process and what it might entail. Maybe you’re looking for a step by step guide on how to claim bankruptcy or perhaps you want to know how to save money on your claim. Regardless of your specific concerns it’s important to understand some of the information below before proceeding.
Before applying for bankruptcy you will need to pass a means test, which is designed to look specifically at your debts, assets and household income to determine if you have a true need for government assistance. This test is also designed to help dissuade people from filing false claims. Once you’ve determined that you qualify to file a claim you will need to determine whether or not you will hire a bankruptcy lawyer to assist you with your case. Although you aren’t required to hire a lawyer, there are several important advantages to doing so, including the following –
• Legal advice and representation
• Someone to walk you through the entire bankruptcy process
• Assistance in gathering documents and filing forms
• Experience and expertise in the process
Regardless of whether you choose to hire an attorney, the next step will be to choose between Chapter 7 and Chapter 13 bankruptcy. In short, Chapter 7 will liquidate your valuable assets to help pay back your creditors, allowing you to eliminate much of your debt. On the other hand, Chapter 13 is essentially a repayment program that will allow you to retain your assets. More information about Chapter 7 and Chapter 13 can be found through the following links: Chapter 7 bankruptcy information and Chapter 13 bankruptcy information.
Once you’ve made up your mind between Chapter 7 and Chapter 13 you will need to complete a court mandated credit counseling course. This course must be approved by the U.S. Trustee program, and must be completed within 180-days of filing your claim. In addition to completing this course, you will also need to complete several forms, all of which can be found at the U.S. Bankruptcy website.
At the time of filing you will be required to pay a fee of $300. This fee will be in addition to any fees that you pay for legal services, which can range from $1,500 to $3,000 per claim. Cheap bankruptcy lawyers are available, though you need to exercise caution when hiring a discount lawyer. After your claim has been filed, you will need to wait about 6 months before your claim becomes active. Click on the following link to learn more about how much is it to go bankrupt.
Going Bankrupt Pros And Cons
Going bankrupt can allow you to completely eliminate your debts and move on with your life, though it also brings with it a host of consequences. Filing bankruptcy can be stressful and even embarrassing if family, friends or coworkers learn of your financial struggles. Bankruptcy can also completely destroy your credit for up to 10 years, which can make it nearly impossible for you to secure any form of financing. Poor credit can also make it difficult to rent a home or even qualify for a job, as many employers now routinely check credit records during background searches.
If you want to know if bankruptcy is the right choice for you then consider taking our free bankruptcy evaluation. This evaluation will put you in contact with someone who cares about your situation, and someone who can help you emerge from debt in a relatively short period of time.