How to File for Bankruptcy

Those who have a lot of bad debts may want to try consolidating their debts before declaring personal bankruptcy. Debt consolidation involves making a payment plan with the assistance of a debt consolidation company; the money is then paid to creditors via the consolidation company. Once such a plan is drawn up, creditors and debt collection agencies are not allowed to call a person regarding the debt. Typically, a person only has to pay back between 15% and 25% of the original debt; the rest is written off by the creditors under the debt consolidation agreement. However, if debt consolidation is not a feasible option then a person should seriously consider filing bankruptcy.

While a person filing bankruptcy can do so without professional legal help, hiring a bankruptcy attorney is always a good idea. The attorney does not need to be the most expensive attorney in town, but he or she should be competent and experienced. If the reason for declaring bankruptcy stems from the fact that alimony has not been paid, then consulting a divorce lawyer may also be a good idea.

A lawyer will advise a person whether he or she should file Chapter 7 or Chapter 13 bankruptcy. The attorney will then help one to fill out the necessary legal paperwork; a good attorney will also help a client to prepare for the court mediated meeting that will inevitably follow.
This meeting is important, as a person’s creditors and their lawyers will also be present. The court appointed mediator will ask one questions regarding his or her assets and will determine which ones can be kept and which ones must be sold to repay creditors.

Bankruptcy proceedings are relatively straightforward is creditors do not make formal objections. However, creditors can object to a person being released from some or all of his or her debts. If creditors raise objections, then the case will go to court and a judge will decide which (if any) debts one will need to pay back.
A person declaring bankruptcy should realise that some debts will never be discharged under any form of bankruptcy. Back taxes, court imposed fines and alimony payments are some examples of debts that must be paid even if a person has declared bankruptcy. If a person buys multiple items on credit while bankruptcy proceedings are underway, then he or she may not be released from these debts. Certain types of loans may also not be discharged under bankruptcy proceedings.

Bankruptcy is not the only way to deal with financial insolvency, but it is a good option and one that should be seriously considered. If debt consolidation does not work, then one may find that declaring bankruptcy allows him or her to clear the slate and get on with his or her life. Anyone declaring personal bankruptcy should start by finding and retaining a good bankruptcy lawyer to help him or her successfully declare bankruptcy and discharge all debts under these proceedings.

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