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FAQ: How Do I File for Bankruptcy?

Posted on February 21st, 2019 by Oddo & Babat, P.C.

Bankruptcy Lawyer

If the bills and unpaid debt are piling up and you feel like you have no other feasible option, you may be considering filing for a Chapter 7 or Chapter 13 bankruptcy. But before you try to take on this enormous feat yourself, it’s important to do your homework and understand your options. Here is everything you need to know about filing for bankruptcy.

What is Bankruptcy?

Bankruptcy is a court process that includes a judge and court trustees examining your financial situation, including your assets and liabilities, and deciding whether to discharge those debts so that you are no longer obligated to pay them.

Bankruptcy gives individuals whose finances have collapsed an opportunity to start over. Whether it was due to bad luck or bad decisions, bankruptcy gives you a second chance.

Who Declares Bankruptcy?

People who typically file for bankruptcy have far more debt than funds to cover them. Folks who have taken on financial obligations such as auto loans, student loans, or a mortgage, and do not have the means to pay it may file for bankruptcy. In 2018, there were 779,828 bankruptcy filings reported, according to the Administrative Office of the United States Courts.

While bankruptcy gives you the opportunity to start anew, it definitely will take a toll on your credit and future ability to use money.

When Should I Declare Bankruptcy?

There is never an ideal time to file for a Chapter 7 or Chapter 13 bankruptcy. But if you think it’s going to take more than five years to pay off all of your debt, it may be a good option. If loans and debt have financially devastated you, bankruptcy may be your best answer.

How Do I File for Bankruptcy?

Filing for a Chapter 7 or Chapter 13 bankruptcy is a legal process that will restructure, reduce, or eliminate most of your debt. Filing bankruptcy with a court is your first step. It’s important to not go at it alone. You should hire the services of a seasoned bankruptcy attorney to help guide you through the process.

You will need to compile all of your financial records, including debts, income, expenses, and assets. This will give you, and your attorney, a better understanding of the situation you face.

The next step you will need to take is to receive credit counseling within 180 days before filing your case. This is mandatory. Many counseling agencies offer these services over the phone or online.

Next, you will file the petition for bankruptcy. You are taking a serious risk if you select to represent yourself, so be sure to call a bankruptcy lawyer. This is because you may not understand how state or federal bankruptcy laws work or be aware of which ones apply to your unique case, especially when it comes to debts that can or cannot be discharged.

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