Filing bankruptcy is a legal process that involves a lot of steps – but also a lot of work before you enter a court. Much of the preparation for bankruptcy can take weeks before approaching the courthouse. Luckily, it’s much faster to resolve and handle debt that many people expect; the average bankruptcy case is handled — from filing to discharge — four to six months. But to get the process started, it’s important to take some steps that move you in the right direction.
Locate Your Clerk of Courts
Search online for your “clerk of court” by county, to find out where the office is.
Analyze Your Debt
Bankruptcy is just like a road trip from one destination to another (more pleasant) place: you can’t tell where you’re going if you don’t check use a map. Consider this proverbial road map to be your financial state. Understanding the kinds of debt you owe (such as mortgage, medical bills, car loans or credit cards), how much you owe and to whom, and terms of your debt (interest rates, penalties and other specifics) is the first important step to understanding how to approach bankruptcy. Analyzing your debt might seem overwhelming and stressful, but keep in mind that being honest with yourself and any financial advisor or assistant will only help you in the long run. Writing down your financial obligations is a great first step to understanding the depth of your finances.
Seek Credit Counseling
If you see that your financial footing — everything from debts, bills and expenses to income and savings — is in dire straits, know you’re not alone. A professional credit counselor or advisor can work through your personal situation to determine what your next steps are, whether that be creating repayment plans or filing for bankruptcy. Credit counseling is an exceptionally important component of a bankruptcy case. If you believe that filing for bankruptcy may be in your future, seeking help from a U.S. court-certified credit counselor is vital in part because it’s a legal requirement. Anyone filing a bankruptcy petition must have attended credit counseling within 180 days before filing. U.S. Courts require credit counseling as a means to determining if bankruptcy is your last resort — and if you’re eligible to file for it.
Consider Legal Representation
If a bankruptcy is in your financial future, then it’s time to consider whether you should obtain legal representation to help you through the process. Some people choose to represent themselves through bankruptcy — called pro se bankruptcy — but many people consider hiring an attorney to guide them through. Because bankruptcy is a lengthy court process that involves legal terms and practices with lasting effects, it’s important to prepare yourself for the best possible experience. In many cases, that’s by hiring an attorney to handle your case (including all technicalities and legal jargon). And, an attorney can make sure you file properly within the correct chapter so that you can have a fresh start without any mistakes or a longer than normal case. If you do chose to file pro se, lining up resources to help you through the process is a must.
Determine Your Eligibility
Meeting with a credit counselor and attorney can help you determine if you’re eligible for bankruptcy. These professional resources are well versed in bankruptcy law, eligibility and loopholes, meaning they can give you a definitive, accurate answer about your bankruptcy eligibility. Most people qualify for some kind of bankruptcy, but what chapters you can file depend on your income, kinds of debt and financial history.
File a Bankruptcy Petition
The final step to preparing for a bankruptcy case is actually filing the bankruptcy petition. This is essentially an application to the court system that notifies them of your request for bankruptcy and begins the process. For most people, submitting your petition will require you to pay administrative fees to start the process, though a judge may waive fees if you’re truly struggling to make ends meet. After filing the petition, you’ll be on your way to handling your debts and making a clean financial start.