Steps on How to File Bankruptcy

Many have often considered bankruptcy as one of the dead ends in personal finances and businesses. When the debts are piling up, unpaid taxes are growing, and creditors lining up at your doorstep, you have no other choice but to file for bankruptcy.

Any place or country on this planet has its own ways on how to file bankruptcy. This is because they have different laws governing this special case. As a result, people from country to country end up with different paths to clear their names off bankruptcy. However, there are standard steps that you can take when filing bankruptcy. To help you on this, here are the steps.

Step 1: Know your reasons

The very first step on how to file bankruptcy is to know your reasons for filing so. You have to have these, otherwise there’s simply no use in filing for one, right? It’s like ordering food when you’re already full. It becomes useless.

There are many reasons why people file bankruptcy. Many do it to escape their debtors. Others file for it to prevent foreclosure of their homes. You, yourself, have your own reasons. Suffice it to say, filing bankruptcy is one of the many options to get out of your current financial situation.

Step 2: Categorize your debts

The second step on how to file bankruptcy is to categorize your debts. Know which of your debts that you can include and those that you can not include in the bankruptcy case.

In bankruptcy, there are certain debts that can not be discharged. Simply put, these debts can not be solved by filing for bankruptcy. What are these debts? Child support, alimony, unpaid income taxes, debts you get from divorce, and student loans are just some of the debts that are not included in bankruptcy filing.

Step 3: Know your finances

The next step that you can do is to know how much of your finances are left. This can be money or certain things that can be liquidated such as cars. One very good reason why you need to know how much money do you still have left is to be able to know how much you can afford to pay the attorney who will represent you.

Step 4: Get an attorney

When you file bankruptcy, you have two options: to get a lawyer or not. However, take note that even if you have this option, many would still advice you to have a lawyer beside you. This could be advantageous in your part making the choice worth the money you’ll end up paying later.

Step 5: Decide how to file bankruptcy

The last step is, of course, deciding on how to approach your bankruptcy case. Bankruptcy laws vary from country to country. In the US, they have certain chapters in their laws, such as Chapters 7 and 13, which can help individuals get rid of bankruptcy. With this, discuss with your lawyer (if you have one) the options available to you as well as the necessary laws that you can make use of.

How to file bankruptcy may seem complicated, but it really is not. As long as you know the right things to do, filing bankruptcy will become less draining than it is supposed to be.

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