Being in debt can be stressful. Shouldering a significant financial burden makes it challenging to manage your finances effectively. Bankruptcy can be a positive tool when it comes to restoring your financial freedom.
Before you determine if you should file for bankruptcy, there are some important steps to take.
1. Meet With an Attorney
While it is possible to file a bankruptcy petition without the help of an attorney, having an experienced bankruptcy lawyer by your side can help ensure your petition provides the most long-term benefit.
An attorney will be able to walk you through the bankruptcy process so that you understand the responsibilities and consequences associated with the filing process.
You will be able to ask questions pertaining to your specific financial situation so that you have all the information you need to determine if bankruptcy makes sense for you.
2. Complete Credit Counseling
Credit counseling can be beneficial for people who are struggling to manage their finances. A credit counseling agency strives to teach clients the benefits of budgeting. You will be able to utilize your actual financial information to generate a monthly budget that makes sense.
Completing the exercises provided by your credit counselor will help you recognize whether or not you need to file for bankruptcy to get your financial situation back under control.
Since current bankruptcy law requires that a person complete credit counseling before a bankruptcy petition can be discharged, you will have to take a credit counseling course anyway. Completing this course prior to filing will streamline the process.
3. Identify Your Valuable Assets
A bankruptcy trustee steps in to take control of your assets once you have filed your bankruptcy petition. Anything of value that isn't legally exempt will be sold to help pay your creditors.
If you have a lot of assets that you don't want to lose, you may want to talk about filing a Chapter 13 bankruptcy with your attorney. A Chapter 13 bankruptcy essentially restructures your debt. The trustee will collect a feasible monthly payment from you, then distribute this payment to your creditors until your debt is paid off.
If you don't have any assets of real value, a Chapter 7 bankruptcy that will totally liquidate your debt might make more sense. Your attorney can go over your asset list with you to determine which type of bankruptcy will best help you meet your long-term financial goals. For more information, contact a bankruptcy lawyer near you.