Disclaimer: The information presented below is meant to serve as a quick guide on some of the effective ways that you can use to deal with bankruptcy and isn’t intended as a substitute for traditional legal advice. To know more about how you can more effectively deal with your bankruptcy after filing for it, you will want to seek the services of a licensed bankruptcy law practitioner nearest you.
The still prevalent stigma against bankruptcy may be the reason why you haven’t considered it as a viable option at all to get yourself rid of insurmountable debts despite federal courts in the United States reporting that more than 700,000 individuals and businesses have filed for bankruptcy as of June 2017. However, you will want to go against the grain and think of bankruptcy as a solution – albeit one that should only be used as a last resort after you’ve exhausted all other options available at your disposal – to relieve yourself of all your debts. To help you warm up to the idea of going bankrupt, here are some effective ways that you can use to deal with it:
1) Hire an attorney who specializes in bankruptcy cases
You may be asking right now how you’re even supposed to get yourself a lawyer to help you out with your intention to declare bankruptcy if you don’t even have enough money to pay them as a result of being mired in too much debt.
- It would please you to know then that most – if not all – bankruptcy attorneys provide legal advice to their clients, whether they be individuals or businesses, for free.
- You can even hire a bankruptcy lawyer who’d be willing to go beyond giving free legal advice by helping you file for bankruptcy without asking you to give them a single cent at all.
- However, a pro bono bankruptcy attorney that you want to hire for yourself might not be able to assist you if they find out that your household income is equal to or greater than 125% of the current year’s federal poverty level.
- Thus, you should furnish the pro bono bankruptcy lawyer that you’re considering to hire with copies of your recent payslips, income tax returns, and credit reports so that they can determine from there if you’re eligible enough to avail of their free services or not.
2) Familiarize yourself with the three most common types of bankruptcy that you can file
If you’re completely new to filing for bankruptcy, you may initially think that you can declare it as is. However, the law provides debtors like you with several types of bankruptcy, three of the most commonly used being Chapter 7, Chapter 13, and Chapter 11.
- Chapter 7 is the most popular type of bankruptcy being filed by debtors in the corresponding courts even if it usually means that most of their assets can be seized and sold with the money resulting from it given to their creditors. A debtor may be able to prevent some of their assets from being seized and sold as a result of filing for Chapter 7, though they might want to check their state’s bankruptcy exemptions for further information as to which ones they can keep.
- For debtors who don’t want any of their assets to be seized and sold, they can file for Chapter 13 bankruptcy wherein they’re only required to tell a bankruptcy court how they plan to settle their debt.
- Chapter 11 bankruptcy is usually reserved for large businesses as it involves reorganizing the business itself for it to continue operating even after being declared bankrupt. You can file for Chapter 11 as an individual to retain all your assets, though you might want to discuss it further with your bankruptcy lawyer to be safe.
3) Move forward instead of wrapping your head around your bankruptcy too much
As much as you have your bankruptcy situation to deal with at the moment, you can’t let it take too much control of your life so that rarely a day passes by without ever thinking of how to get rid of your massive debt.
- In fact, you should even be thankful that filing for bankruptcy allows you to start all over again with your finances and do your best not to commit the same mistakes that you did before.
- Thus, you should have a clear head and a calm demeanor when dealing with bankruptcy. In case you find yourself panicking or getting too emotional as a result of your bankruptcy, you might want to consider going through financial counseling.
Some people may still be carrying a frankly outdated negative perception against the very idea of filing for bankruptcy. Yet several individuals and businesses have been using bankruptcy as a tool to get themselves rid of their debts and provide a fresh start as well. If you’re currently neck deep in debt and you’re already at a loss on how to make it go away for good, you should file for bankruptcy as soon as possible and read the above-listed effective ways on how you can deal with it so that you can start rebuilding your finances from scratch.
Here’s to hoping though that you won’t have to declare yourself bankrupt and read this all over again anytime soon.
This article is contributed by Monika Hall. She is a businesswoman and has been a law writer for the past 12 years. She is currently writing a new law piece and hopes to impart her knowledge to others in her writing. Monika is forever a creative spirit. She always expresses herself with creative pieces such as poetry whenever she has the time.