Not everyone wants to file for bankruptcy, but if there are no more options left but that, then there are some things you need to know before taking the plunge.
First of all bankruptcy is a legal procedure used to discharge (pay off) debts that cannot be met. It is more like starting from square one only that it involves some pros and cons that you have to bear in mind before deciding. Some steps to follow in filing for bankruptcy are:
1. Make sure that there are no other alternatives that you can go for; this is because bankruptcy remains your credit file for up to 10 years.
2. Get to know the bankruptcy laws of your state, because bankruptcy laws differ from one state to another.
3. Know the types of bankruptcy laws. There is the Chapter 7 law (straight or liquidation bankruptcy-this is for individuals who have few assets and a lot of debt to pay like those accrued from credit cards) and Chapter 13 law (which is a repayment plan for debtors who are unable to pay, their rent, mortgage, student loans, cars, taxes and other secured types of debts).
4. Draft and file your bankruptcy petition. The Bankruptcy forms can be obtained from a legal stationery shop and cost $20.
5. Choose how to file the petition. This can be done with the aid of a lawyer, or a paralegal if you cannot afford a professional lawyer.
6. Meet with the lawyer or paralegal and go over the document, fill in accurate and honest information concerning your assets, liabilities, expenses, and credit card transactions.
7. Find out how much the filing will cost you and then file the original copy of the petition and three other copies with the court. Another copy must be retained by the petitioner. It may be typed or handwritten as long as it is legible.
8. Refer all your creditors to the hired lawyer or paralegal and ensure that you follow up on the progress with them as often as you can.
Filing for bankruptcy is neither easy nor fun especially given the fact that it will stay on your credit record for up to a decade - and of course it's a global announcement that you're broke. But make sure that you have all the facts right and have considered the laws of your state before you file for bankruptcy.
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