Deciding to file for personal bankruptcy is an important decision to first weigh carefully. Your future will be impacted for several years, and you will have to work to regain a better credit score. Of course, if you are considering filing for bankruptcy, your credit may already be suffering from inability to make monthly bill payments and late payments on bills.
Steps to Declare Bankruptcy for Individuals
Learning more about your options and the bankruptcy process can relieve you of some of your fears about bankruptcy. The following are some of the general steps you will encounter if you file for personal bankruptcy:
- Get credit counseling. Credit counseling is now mandated for debtors who file for personal bankruptcy. Depending on the state in which you live and the type of bankruptcy you file, your credit counseling requirements may vary. Generally, you complete a pre-bankruptcy session and a post-bankruptcy session. You will be provided assistance with developing a budget to help you manage money after your bankruptcy. This can be helpful because you will be able to see how much you are spending each month, figure out areas that you might be able to cut back on spending and assess whether you can start putting some money away for a rainy day.
- You will have to pass an income means test to be eligible to file for bankruptcy. This just means that you have to meet certain income requirements to file for bankruptcy for each chapter. For Chapter 7, the income means is lower than for Chapter 13 for persons of similar situations (i.e. same family size).
- Decide which type of bankruptcy is right for you. This will depend on whether you have assets you need to protect, how much money you make and other considerations. An attorney will consult with and help you figure this out, so you do not need to worry if you are uncertain.
- Once you hire an attorney, she will advise you of any other requirements in your state and in your case.
Getting Legal Help
Filing for personal bankruptcy can be a good way to start a new financial future for some debtors. If you are one of them, a bankruptcy attorney who practices in your area is in the best position to help you get through the process. You can get help with filling out the paperwork, deciding which type of bankruptcy you are eligible to file and dealing with your concerns.
