Deciding to file for bankruptcy is not an easy decision for most people. It is a last resort type of decision and one that is not made lightly for most that make this decision. More and more are finding themselves in the position where they just cannot pay their bills because of loss of income due to the economy or even due to overwhelming medical bills, but whatever the reason, filing for bankruptcy has increased in the past few years.
It is not a quick process. Some people have done it by themselves without the representation of an attorney, but with the changes in the tax laws and bankruptcy laws, having an attorney now is a must. You are filing bankruptcy because you don’t have enough money to pay your bills, so how do you afford the cost of an attorney? You can’t afford not to have one. Save for a few months, if necessary before you hire an attorney, but having a lawyer by your side as you navigate the halls of bankruptcy court is a necessity.
There are two types of bankruptcy. A chapter 13, in which you are still required to pay some of what you owe your creditors, and the chapter 7, in which all the debt is wiped clean. You have to show sufficient reason in order to get a chapter 7 decision, such as a spouse who is no longer able to work due to illness or something like that. Your house and at least one car will be protected. You must list all of your assets and if you have toys such as boats or a motorcycle, be prepared to sell them to help pay what you owe. They will not take television sets or things that you need for your daily living like appliances, but when you list your assets, be sure to put everything down. If they find that you have lied about anything, you will not have an easy time of it after that.
It takes a few weeks to get the paperwork done and filed, and then you get your date with the trustee who is assigned to hear your case. You are in a room with people who are in the same boat as you, so don’t feel ashamed when you arrive in court. Your attorney will be there with you to guide you through the process. The trustee asks questions about why you are there and all the answers you placed on the questionnaire. If you answer truthfully and you have a legitimate reason for filing, he will decide whether or not to grant you your bankruptcy.
Your attorney and you will have decided which way will be best for you, either chapter 13 or chapter 7, based on your circumstances and the trustee only grants that decision. He may decide that you owe the court money depending on if you had any cash on hand or received your income tax return at a very ill timed date, as this writer experienced, but they will work with you as far as making a payment plan.
Having a clean slate to start over and no creditors calling and hassling you is a wonderful feeling. Bankruptcy is a great tool for people who have no other choice when circumstances have been out of their control. A word of caution. Do not allow yourself to go out and accumulate more debt just because you now are debt free. Offers for credit cards and for car loans will start pouring in as soon as your case is filed in the court system. Don’t fall for that trap again. After all, too many credit cards are probably why you were in bankruptcy court in the first place. Use this second chance wisely and well.