How to Get Bankruptcy Assistance

If you are drowning in bills and can't see a way out, bankruptcy may be your last recourse. Bankruptcies stay on your credit report for 7 to 10 years and are probably the worst thing you can do to your credit rating. Before seeking bankruptcy assistance, take steps to exhaust every other option available. Here are guidelines for knowing if you're at the bankruptcy stage.

Instructions

Difficulty: Moderate

1. Gather all your financial records in one place. Organizing your debts can help you determine exactly how much you owe.
2. Determine if what you owe exceeds how much you can possibly pay back. If you have hundreds of thousands of dollars in debt and don't make nearly that much, bankruptcy could be your only option.
3. Consider getting a debt-consolidation loan. Debt-consolidation loans offer you the opportunity to pay back all of your creditors while only paying one monthly fee. If your debt consists of high-interest loans, this can save you money, because consolidation loans typically carry a lower interest rate than many high-interest credit cards.
4. Look into credit counseling. You'll be mandated to get credit counseling if you file for bankruptcy, so you might as well get it first. Credit counseling provide assistance in analyzing your financial situation and helps you look for alternatives to bankruptcy.
5. Hire an attorney who specializes in bankruptcy. The easiest way to find a reputable attorney is through word of mouth, so ask the people you know for recommendations. Alternatively, you can search for an attorney online or ask your credit counselor for a recommendation. If you belong to a union, you may be able to get recommendations through your local chapter.
6. Talk to your attorney about the two different types of bankruptcy available to you. Chapter 7 bankruptcy is a liquidation of your assets to pay your debts. With Chapter 13, you maintain your assets, but you have to continue to pay your creditors according to a repayment plan supervised by a trustee of the court.

Tips & Warnings

• Liquidate your assets to pay your debts. If your debts are equal to your assets, consider selling your house, car or whatever you have to pay of your creditors, and you won't have to have the blemish of a bankruptcy on your credit.
• Propose a compromise to your creditors. If your creditors know that you are going to file for Chapter 7 bankruptcy, they will sometimes make a deal to accept a lesser percentage of your debt. If they get half of what you owe them, it's a better deal than if they get nothing when you file for bankruptcy.
• Look into the credentials and the references of any attorney you are considering. The attorney you choose should have a good track record with bankruptcy cases.
• Beware credit-counseling scams. Some companies prey on those in financial crisis with offers of assistance that will only drive you deeper into debt.