Bankruptcy is a legal process whose goal is to help a borrower eliminate his or her outstanding debts or re-organize the loan in a way that it could be paid more comfortably. There are various types of bankruptcy you can apply and this depends on your specific financial situation and obligations. If you need to file for bankruptcy there are several options you must first decide on. The following are steps on how to file bankruptcy.
1. Make a decision to either go alone or choose a lawyer
Normally a lawyer handles the filing but nothing prevents you from conducting a research and filing on your own. A bankruptcy attorney having relevant experience on bankruptcy issues will advise you which option between chapter 7 and chapter 13 would be suitable for your case. Chapter 7 bankruptcy has no maximum debt restriction while chapter 13 bankruptcy requires borrowers to develop a budget for outstanding debt to determine if it is feasible.
2. Gather the necessary documents
The next step would be gathering all your personal information necessary for filing out the legal paper work. If you are using the services of an attorney these documents should be availed to him or her. The documents you would need to gather to complete your paper work include:
- Asset information- Gather documents which indicate information on all the assets you have including whole life insurance policies.
- Creditor information — it is important to collect information on all the creditors that you owe money currently. You will be expected to provide the addresses of these creditors and the estimated amount of money you owe them.
- Filed tax returns for the last two years but a minimum of 4 years for a chapter 13 bankruptcy.
- Information about your income i.e. your pay stubs for the last six months.
3. Attend a credit counseling class
Prior to filing a bankruptcy application it is important to attend and complete a credit counseling course. This class which lasts for approximately 1.5 hours can be done over the internet or over the phone. It is a requirement that this class is completed within the six months of making an application. Make sure you make an application before credit counseling certificate expires.
4. Complete the petitions and schedules
The next thin g you are required to do is to complete a petition and schedules and then file them with the court. You will be required to file your documents at a location you have lived for the last 180 days. If your application is being handled by a bankruptcy lawyer he or she is expected to fill the petitions and schedules and then review them with you. These documents are then to be filed in a bankruptcy court.
5. Attend a 341 hearing
A 341 hearing schedule will be arranged after you have successfully filed your application. In this hearing you are expected to provide proof of your social security number and identification. If you have hired a bankruptcy lawyer he or she will be expected to accompany you during this hearing. The best lawyer should be able to answer any questions you might have about the 341 hearing.
6. Complete a debtor education class
This is among the last things you will be expected to do while filing for bankruptcy. After successfully completing this second class ensure you fill the relevant forms with the court to indicate that you have gone through this class. If you are using an attorney he or she would be the one to fill this form.
These are simplified steps of how to file bankruptcy. There might be other steps which are omitted. However the best thing to do is hiring the services of an experienced bankruptcy lawyer who would assist you in filing this application.
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