How to File for Bankruptcy
Filing for bankruptcy is one solution to financial troubles. The process has been established clearly by the law to give individuals or corporations a fresh financial start.
Bankruptcy is perhaps the most effective way to protect one’s self and one’s assets from creditors. Though effective, it is also the most drastic option. As such, filing for bankruptcy is also often seen as the last resort in an effort to solve one’s financial problems.
Types of bankruptcy
Bankruptcy can be applied to both individual and corporate circumstances. It can also be either voluntary or involuntary. The former is dubbed as such since it is not the individual or the business entity that files for bankruptcy. In fact, for this case, the creditors would be the one to file a bankruptcy petition against the debtor. The latter case is wherein it is the debtor himself who files for bankruptcy.
Should you file for bankruptcy?
Filing for bankruptcy is a very sensitive personal issue. It is a decision that one must make only after weighing all the other possible options available to him. Though it is an effective solution, it is not for everyone. One important consideration is whether or not you have assets to protect. If the latter is true, then there is no need for you to file for bankruptcy.
On the other hand, here are a few considerations that may be feasible reasons to file for bankruptcy:
- Your salary has been garnished
- Your bank account has been attached
- Majority of your debts are unsecured. These include credit card debt, hospital bills, and other unsecured loans.
- You do not foresee yourself being able to pay off your debt – discounting car loans and house loans - in the next 5 years or more.
- You are facing lawsuits regarding your debt.
- You have income tax that is unpaid and you do not have the capacity to pay them.
- You do not have much in the way of assets.
- You do not have much in the way of savings.
- You have had property repossessed in the past.
How do you file for bankruptcy?
Once you have decided that filing for bankruptcy is the best option for you, you need to sort out your plan. You need to gather all the pertinent documentation – unpaid bills, tax returns, and the like. You would also benefit from the assistance of professionals. You can hire one if you think that you can somehow pay them or come to an agreement with them or you can seek the help of non-profit organizations specializing in bankruptcy.