When individuals and businesses have far more debts than their earnings to cover and don’t see that changing anytime soon, they might file for bankruptcy. According to statistics, usually individuals, instead of business, are the ones that most often file for bankruptcy. For instance, in 2019 there was a total of 774,940 bankruptcy cases filled, 97% (752,160) of which were filed by individuals.
When to File Bankruptcy
Many people might ask when to file bankruptcy. Actually, there is no “perfect” time for filing bankruptcy. But if you need more than five years to pay off your debts, it might be a good time. Because bankruptcy helps you make a plan that enables you to repay your debts in 3 to 5 years. Also, the U.S. Bankruptcy Code might grant you a chance to start fresh and help you overcome the economic difficulties.
How to File Bankruptcy
Filing for bankruptcy usually starts with compiling and listing all your financial records, which include assets, debts, income, and expenses. This shows the whole picture of your situation. Then, you will receive credit counseling within 180 days before filing your case, in which you need to prove that you have no choice but to declare bankruptcy. The counselor shall work for an approved agency listed on the website of the Unite States Courts. The counseling service will be provided online or over the phone for the most part. Once it’s done you will get a certificate of completion, without which your filing will be rejected.
Next you need to file the petition for bankruptcy. If you have never done this before, it’s recommendable to find a bankruptcy lawyer. Although legal counsel is not a requirement for all, you are in fact taking a serious risk if you choose to represent yourself. The process is complicated, entailing a high level of understanding the federal and state bankruptcy laws. 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, meaning a fresh start for you.