When and How to File Bankruptcy
For whatever reason, be it wrong decisions or sheer bad luck, people and businesses may get into a difficult financial situation. When that happens, the law allows them to file bankruptcy so they can start anew.
This is often the last resort for individuals and companies that can no longer pay their bills. But, while this gives them a second chance to correct their financial failures, there are still risks. Read on to learn the essentials of declaring bankruptcy.
When Should It Be Filed?
Keep in mind that there isn’t a “perfect” time to file it. Calculate your liabilities first, including your credit card debts, unpaid bills, and various loans. Afterward, estimate the time you need to pay all of that.
If you require more than 5 years to settle those accounts and solve your financial problems, then declaring bankruptcy is a decent option. You should know the consequences though. Your future ability to acquire credit will be affected, and you may find it harder to apply for new loans.
Speaking with accountants and attorneys from the best bankruptcy law firms definitely helps. These experts have the knowledge and skills to walk you through the process and inform you of its benefits and drawbacks. Their professional advice will guide you in making the right decision.
Steps in Filing
The first thing you need to do is to compile your financial documents for the last 2 to 3 years. This includes tax returns, pay stubs, valuations and appraisals, bank statements, and credit card reports. Collect your medical bills, student debts, and home loans too, if applicable. This helps you and the court understand your situation better.
Then, take credit counseling from an institution accredited by the Department of Justice. This takes less than 2 hours and can be done online or by phone. The fee ranges from $10 to $50, but it can be waived if your income is under 150% of the Federal poverty line.
The most tedious step is filling out forms. There are more than 20 questionnaires, and they’re downloadable online. They ask about your salary, credits, and assets. Once done, they need to be filed to the court. You’ll be charged a filing fee. If you don’t have enough cash on hand, request to pay it via installments.
After about a month, a hearing will be scheduled so the court can decide on the case. The person who filed should attend. If for whatever reason they can’t, they may be represented by an attorney from a bankruptcy law firm in Mattoon IL. The usual 1-hour procedure almost always ends with the judge deciding in favor of the petitioner.