How to Go Bankrupt

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Step 1: File a petition. In order to go bankrupt, you can get a lawyer to help you or you can do it on your own. Once you file a petition, you get automatic stay. This means that creditors aren't allowed to call you anymore. If you have already file bankruptcy, you might not get automatic stay again.

Step 2: You will declare chapter 7 or 13 if you are an individual. Chapter 7 is liquidation meaning your nonexempt assets are liquidated to pay off your debt. Any remaining debts may be discharged. Chapter 13 is reorganization meaning your debts are made easier to pay.

Step 3: Go to a meeting of creditors. There will be an important meeting between you, your creditors, and your trustee. The creditors will ask you questions to make sure you are honest. You can prepare for this meeting ahead of time with your lawyer, but it doesn't take that long so there is not too much to worry about.

Step 4: Wait for your trustees decisions. They will let you know what assets will be liquidated or how your debts will be reorganized. Again, a lawyer can help you out a lot through this whole process. If any of your debts are discharged, the creditor has 60 days to challenge.

Finally, you are finished. Unfortunately, after all this, your bankruptcy will be on your credit report for 10 years. That can mean a huge roadblock if you want to get a loan. Avoid bankruptcy if you can or otherwise don't expect to be taking out any loans anytime soon.