Filing for bankruptcy may be the best option for protecting some of your assets, eliminating debt and stopping certain legal actions against you. Thus, if you are in significant amounts of debt that you can’t pay, consider this move.
Nonetheless, you need to be prepared to make the right calls. Here is how to do so.
Gather your documents
Paperwork is necessary when filing for bankruptcy, including income statements, tax returns, monthly expenses, credit reports and a list of assets. Having these documents at hand can help you fill out forms with accurate information. For instance, you should obtain credit reports from your creditors to include all of them.
Get credit counseling
Credit counseling can help you develop a plan for paying off existing debts and avoiding new ones in the future. Besides, to file for bankruptcy, you are required to complete a credit counseling course from an approved agency. You will submit your certificate of credit counseling with other needed paperwork.
Cancel automatic payments
When creditors are notified of your bankruptcy filing, they will stop automatic collection efforts. However, before then, you may have new charges on a card submitted in bankruptcy. Thus, to avoid this, consider canceling automatic payments before filing.
Have a budget
Depending on the bankruptcy option you want to file, you may need to pay creditors a certain portion of what you owe them or a repayment plan. Accordingly, you need a budget – make a few changes in areas where you can save money to pay off the non-dischargeable debts. For example, you can avoid eating out, and instead cook at home more often.
When you are prepared when filing for bankruptcy, you can avoid unnecessary mistakes. Further, it will be best to evaluate your case with professional help to develop the most suitable plan.