How to Prepare for Bankruptcy Court
Filing for bankruptcy is a regrettable event, but for many people, it is unfortunately necessary. When you accumulate so much debt that it becomes impossible to repay in a timely manner, declaring bankruptcy may be the only solution. But first decide what type of bankruptcy you qualify for and then take the necessary steps for filing.
- Difficulty:
- Moderate
Instructions
Things You'll Need
- Tax returns
- Income pay stubs for the past 6 months
- Demand letters from creditors
- Loan documents
- Credit card statements
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1
Consider your assets. If you have any non-exempt assets, such as a home, file for Chapter 13 bankruptcy instead of Chapter 7. Under Chapter 7, your assets are liquidated in order to pay back your creditors. In contrast, Chapter 13 allows you to maintain your property and assets while paying back creditors according to the repayment plan approved by the court.
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2
Evaluate your income. If you have a full-time job and a regular income, you probably won't be eligible for Chapter 7 bankruptcy.
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3
Think about co-debtors. If you have loans along with someone else, that person will become solely responsible for paying back the loan if you file for Chapter 7 bankruptcy. To protect a co-debtor from legal action, file for Chapter 13 instead.
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4
Compile all of your financial records. This should include your pay stubs denoting your regular income for at least the last 6 months, all of your credit card and loan statements, tax returns and any demand letters you have received from creditors or collection agencies.
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5
Consult a bankruptcy attorney to determine which filing is most appropriate for your needs and future plans. An attorney will also help you prepare your filing for bankruptcy court.
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6
Continue to pay debts that will remain after your bankruptcy filing. Your bankruptcy attorney will help you determine which debts will survive the filing and which ones will be discharged.
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Tips & Warnings
A bankruptcy filing is the worst thing you can do to your credit rating. Only file for bankruptcy when it is a last resort.
Do not incur any more debt once you decide to file for bankruptcy.
