What To Know Before Filing For Bankruptcy

Written By Alla Levin
November 12, 2021
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What To Know Before Filing For Bankruptcy

When you are under a huge financial strain and are no longer in a position to repay your debt, filing for bankruptcy is the only way out. However, this option will incur huge dents in your credit score, but you have no other way than to do this.

This also helps you press the reset button and allows you to design your financial journey from the very beginning.

Check The Eligibility

You must know the eligibility criteria before looking at a large number of forms available to you. You will be asked for a test called the means test, which includes a thorough inspection of your finances. This test is done under the supervision of an autonomous trustee. Once you have given the test, the trustees will decide whether you are qualified to file for bankruptcy or not.

The means test analyzes and interprets your transactions and financial statements for the last six months. Moreover, according to a bankruptcy lawyer San Diego, the supervisor will also pay close attention to your income and history of loans. This ensures the protection of creditors against any fraud or bankruptcy abuse.

Get Credit CounsellingGet Credit Counselling

Before filing for bankruptcy, you must opt for credit counseling in the last 180 days. You must have the proper knowledge of all the financial charges and effects of bankruptcy on credit scores. Moreover, you may take a debt education course, which will help you better understand credit reports and scores.

Before Filing for Bankruptcy: Hire An Attorney

If you are really in an emergency and do not want to delay things anymore, you must hire a potential bankruptcy attorney for yourself, such as these experienced Chapter 13 Bankruptcy Lawyers Milwaukee. An attorney will guide you better in deciding which chapter of bankruptcy you should file for.

Bankruptcy Doesn’t Make You Debt Free

You can file for bankruptcy and discontinue all your unsecured debts, like credit card bills and foreclosures, but they do not eliminate you from any child custody, tax debts, or student loans.

Moreover, the bankruptcy tag will be reflected on your credit report for more than 7 years, and it negatively impacts your credit score. Therefore, you must think thrice before filing for bankruptcy.

Do Not File The Wrong Form

While you are filing for bankruptcy, you will have to go through a lot of paperwork and fill many forms, such as petitions, bonds, financial statements, and other essential documents. If you have not hired an attorney for yourself, it’s your responsibility to understand the terms and file the correct bankruptcy form.

Bankruptcy is a long process, and it does not end very easily. It takes almost a year to complete all the credentials. If you owe a lot of assets or cash, you will find it a lengthy and challenging job.

Go Through The Rules And Regulations

In every bankruptcy court, there are certain rules set for the debtors. The trustee may need some supporting documents, like tax returns and regulations you would need to fulfill. You may not be allowed to leave the city or country without notice to the court.

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