When individuals and businesses have far more debts than money to cover than and don’t see that changing anytime soon, they might file for bankruptcy. According to statistics, usually people, instead of business, are the ones most often filing for bankruptcy. For instance, there were 774,940 bankruptcy cases filled in 2019, and 97% (752,160) of them were filed by individuals.
Many people might ask when and how to file bankruptcy. There is no “perfect” time for filing bankruptcy. But if you might take more than five years to pay off all your debts, it might be a good time to declare bankruptcy, since bankruptcy also helps you design a course that enables you repay your debt in 3 to 5 years. Also, the bankruptcy code might grant you a second chance and help you overcome the economic difficulties.
Filing for bankruptcy usually starts with compiling and listing all your financial records, which include debts, assets, income, and expenses. This action gives you and the court a better understanding of your situation. Then, you must receive credit counseling within 180 days before filing your case, because you need to obtain counseling form an approved provider listed on the Unite States Courts website. Most counseling agencies would offer this service online or over the phone, so you can finish this step at home without spending a long time on road. Besides, the courts would like to make sure that you have no any other options to handle your problem except bankruptcy, which makes the quality and the evaluation from credit counseling become extremely important. If your paperwork is not persuasive enough or if you don’t have any counseling report, your filing will be rejected.
After obtaining a counseling report, you now need to file the petition for bankruptcy. If you never have done this step before, it’s commendable to find a bankruptcy lawyer. Although legal counsel is not a requirement for individuals filing for either Chapter 7 or Chapter 13 bankruptcy, you should realize that you are in fact taking a serious risk if you choose to represent yourself. The petition process requires a high level of understanding the codes and the regulation about bankruptcy, and thus it’s always a better option to find a lawyer during a bankruptcy petition.
Once the petition is approved, your application of bankruptcy is completed, and you could then start over again.