If you are struggling financially and finding it hard to pay your bills, filing for bankruptcy may be your only way out. However, before making the big move, you need to be well-prepared for life ahead.
There are long-term consequences you need to consider beforehand. For instance, bankruptcy will stay on your credit report for some years to come. However, it is possible to reorganize your finances and rebuild your credit rating after filing for bankruptcy. Here is what you need to know:
Preparing well can make the process easier
First, you need to find out if you qualify for bankruptcy. Your tax returns and copies of your proof of income will help establish that you meet the income and resource limitations.
If you do, then the next step is to list all your debts. You can obtain a credit report and compare the list of creditors on the report to the one you make as you file for bankruptcy. This will help you avoid leaving out any creditors and help you know the debts that will not be discharged.
You also need to report your assets to the court. Smaller items can be categorized together to save you the trouble of listing everything individually. It is also advisable to have copies of your financial records such as bank and retirement accounts.
Finally, you should get ready for your credit counseling course and bankruptcy hearing.
Avoid these common mistakes
Certain mistakes can wreck your plans and leave you financially vulnerable. For instance, giving away assets to your family for safekeeping or failing to disclose their existence can come back to haunt you. Equally, running up your credit card limit because you intend to file for bankruptcy is ill-advised.
Bankruptcy can be a beneficial process but only if you do it right. Learning more about what is expected of you will come in handy and ensure a smooth hassle-free process. Experienced legal guidance is key to your success.