If you’re struggling financially and are considering bankruptcy, you are not alone. In 2016, just under 800,000 people filed for bankruptcy. The decision to file for personal bankruptcy shouldn’t be taken lightly, and it should start with contacting an attorney to learn more about your options.
After speaking with an attorney, if you determine that filing for bankruptcy is the only way to find financial relief and a fresh start, it is critical to begin preparing for the process. Here are a few steps you should take to help you prepare to file personal bankruptcy.
Learn About the Difference Between Chapter 7 and Chapter 13 Bankruptcy
Your attorney will help you determine the best bankruptcy option for you. For most individuals, this is either Chapter 7 or Chapter 13 bankruptcy. Otherwise known as liquidation bankruptcy, Chapter 7 is an option for individuals who do not have a substantial or regular income and need to completely wipe out their unsecured debt, such as credit cards and medical bills. If you have a steady income, and this income is above the limits to qualify for Chapter 7 bankruptcy, Chapter 13 is typically your only other option. Chapter 13 is also referred to as reorganization bankruptcy. Under this plan, you will repay a portion of the debt you owe to creditors. If you are behind on your mortgage and face foreclosure, your attorney might also recommend Chapter 13 bankruptcy.
Check Your Credit Report
Even if you’ve meticulously kept track of your bills and debts, it is still important to obtain a credit report from all three credit bureaus: Experian, Transunion, and Equifax. Take a careful look at all three credit reports and look for any discrepancies, such as negative marks from loans, credit cards or other unsecured debt that is false or you’ve already paid off. If you notice any misinformation on your report, contact each credit bureau to have the discrepancy investigated and removed. There is another important reason to order reports from all three credit bureaus: to ensure you include all your creditors in your bankruptcy paperwork. If you exclude or forget to add a creditor to your bankruptcy plan, they will not receive any payments. Once your bankruptcy is discharged, these creditors could attempt to collect on the debt.
Gather the Necessary Documents
Before you can file for bankruptcy, your attorney will require several documents. These will help determine whether you qualify for Chapter 7 relief or if Chapter 13 bankruptcy is the more likely option. Here is a list of several documents you will need to provide your attorney before you can file for bankruptcy: Pay stubs. You will need to provide at least six months’ pay stubs. If you are self-employed, your attorney will require profit and loss statements for several months, instead. Tax documentation. To determine your income, and in turn, if you qualify for Chapter 7 bankruptcy, you will need to provide at least two years of completed returns. Mortgage statements. In addition to several months of mortgage statements, you will also need to provide a document that states the value of your home. This can be obtained online or through a real estate agent. Vehicle information. You will need several pieces of information in regards to your vehicle. These include loan statements if you are still paying for your vehicle, a copy of your registration and the approximate value of your car. In addition to this information, you will also need to provide a copy of your driver’s license or state issued identification card and a copy of your Social Security card. Filing for bankruptcy is a long and often confusing process. If you are consider filing for bankruptcy in the future, don’t hesitate to contact the professionals at Lunch & Belch, P.C.