What is bankruptcy and how to go bankrupt?
When a person declares himself as bankrupt, that means he cannot repay back any outstanding debts which he may have. A person can declare either himself or his company as bankrupt. This is a legal process available for the people and businesses to eliminate their debts or repay them back under the protection of the court.
Life after bankruptcy is very hard. Bankruptcy brings a lot of emotional turbulence and psychological stress apart from the major financial setback to one's life. Recovering back from bankruptcy can be a very difficult, long and stressful journey. Therefore, it is always recommended that people look for ways to avoid being bankrupt. However there are cases when avoiding bankruptcy is not possible and people have to file for bankruptcy.
Once it is decided that this situation cannot be avoided, people look for ways to go bankrupt. Many people in this situation ask - how to go bankrupt? What is the cheapest way to go bankrupt? Can I file bankruptcy without any attorney? Is there any such thing like "do it yourself bankruptcy"? The answers vary depending upon each person's financial condition and reason for filing bankruptcy. Some of the major reasons why people become bankrupt are lawsuits, garnishments, unpaid medical bills, auto repossessions, high interest loans etc.
Here are the steps which need to be followed while filing for bankruptcy:
1. First understand what bankruptcy means. You need to understand what debts can be waived off and what will not be waived.
2. Check if you are eligible for filing for bankruptcy. There are various conditions which need to be met before a person is eligible for filing for bankruptcy. These include:
be residing in
Â· Must pass 'Means Test' to file Chapter 7 bankruptcy case
Â· Must undergo credit counseling program
Â· Must not have competed payment plan of Chapter 13 in last 6 years (while filing for Chapter 7)
3. Choose the type of bankruptcy which needs to be filed. Chapter 7 eliminates most of your debts but makes your financial life very difficult after bankruptcy. Chapter 13 allows you to pay back your debt and realign your finances for better future life. Chapter 11 is for businesses and companies who are not able to operate.
4. File your case in the local court.
5. Present your case in the court and face your creditors. You may be asked questions and require to tell the court how you came into that situation.
6. Then all your assets will be liquidated as a part of bankruptcy settlement.
While you may choose to file for bankruptcy yourself, it is always recommended to take help from a legal consultant. Since these legal procedures can be long and complicated, you may need that extra help in this difficult situation.