If you are thinking of declaring yourself bankrupt, it is very important that you get your own legal or financial advice from a lawyer or legal representative, a qualified accountant, or a financial adviser with a good reputation. You can’t just do it alone and expect for everything to work. When you decide to file for bankruptcy you will have to be represented by someone who is certified to be able to stand on your behalf.
Declaring yourself bankrupt
You will then have to file all the necessary paperwork in order to ensure that your case is handled fast. Your bankruptcy petition will look at your income and your debts. You will list all of them. We advise that you get a copy of your report so that you can precisely record all of your debts and clear up any of the debts that were written by mistake.
If you disagree over the creditor's claim, you should try and reach a settlement before you file your claim for bankruptcy. Trying to do so after the bankruptcy order is made will be difficult and extremely costly.
Then you will have to take your bankruptcy claim to court. Once the order for bankruptcy has been issued it will be written down on your credit report and remain there for a 7 year period. This is just a concise account of how to go about filing for bankruptcy, as this is your guide on getting yourself out from bankruptcy’s shadow.
Chapter 13 Bankruptcy
When, under Chapter 13, someone files for bankruptcy, their goal is to have the possibility to pay back some or all of the debts that they have acquired in their name. This is slightly different from a Chapter 7 bankruptcy which uses asset liquidation in order to recover you from the debt. Chapter 13 will enable the debtor to make use of whatever income they might have in the future in order to pay the creditors off.
I shouldn’t have to mention that filing Chapter 13 Bankruptcy is very good for someone that actually has a steady income, and can afford to ask for payment adjustments, or reductions.
Bankruptcy is a good solution for someone with considerable debts, no income and no assets.
Usually, bankruptcy has the highest effect on those that actually have equity in property, some income to dispose of and people that have professional qualifications, because they are the ones who stand to lose the most. For instance, a lawyer should try to overlook bankruptcy because the result will be that they won’t be able to practice their profession.
It is possible for you to write to your creditors and look for an informal arrangement that will allow you to repay your debts over a specific and pre-agreed time. The only drawback to doing this is that it will not be legally binding and your creditor might choose to ignore it later on and look for direct payment.
If your debts are rather small, ranging between $5000 or less and you have a regular income, the court might agree to set up an order so that you can pay your creditors each month but through the court. Quite obviously, for debts this small, a credit union might be the best bet for you. Basically, these are just banks that are set up to direct your wages toward your debtors, but they will also help to diminish the payments for you and in some cases even remove some of your creditors all together.
If you have some bad debt problems, such as debts over $10,000, you might have to turn to bankruptcy in order to help yourself. You might also want to set up payment arrangements with your creditors. You can establish an agreement between you and your creditors that will enable you to pay back a percentage of the debt over a set period of time, which usually ranges from around five years.
The benefit of doing this is that you will have better control over your assets, fewer restrictions and won't be labeled as bankrupt. This is very good should you be running your own business. Nevertheless, sometimes, filing for bankruptcy is all that you can do. In this event, it will help to know the exact procedure. That is what the following section will provide you help with.
More on the next page: Bankruptcy Procedure 2
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