How to Declare Bankruptcy. It costs money to announce that you don’t
have any. And that’s just one of many unpleasant surprises
about filing for bankruptcy. You will need Eligibility Credit counseling
A bankruptcy petition Successful completion of a money management course and legal representation
(optional). Step 1. Understand bankruptcy, which shelters you
from having to repay certain debts. It does not mean all is forgiven. You remain responsible for student loans,
alimony and child-support payments, overdue taxes, money awarded your spouse in a divorce,
and judgments for assault or drunk driving. Filing for bankruptcy does not puts eviction
proceedings, child-support lawsuits, and divorce filings on hold. Step 2. Figure out if you’re even eligible to declare
bankruptcy. If you have a steady income above your state’s
median, and if it is conceivable that you could afford to pay $100 a month toward your
debt if you cut out extras like cable TV, you can’t file for Chapter 7 bankruptcy — the
one that wipes out many of your debts. Step 3. Consider whether you might be a good candidate
for Chapter 13 bankruptcy, which reorganizes your finances into a three- or five-year plan
of partial repayment. The advantage to Chapter 13 is that you may
be able to hang on to your home. Chapter 11 bankruptcy involves complex financial
restructuring and is mainly used by businesses or people with significant assets and debts. Step 4. Stop all unnecessary spending. While it may be tempting to max out your credit
cards with luxury items and cash advances right before filing for bankruptcy, this is
considered fraud, and you’ll be held responsible for it. Step 5. Meet with a government-approved credit counselor
about working out a way to repay your debts. This is mandatory before you are allowed to
file for bankruptcy, and it must be done in the six months prior to filing. Get a list of accepted agencies from your
local bankruptcy court, which you can find on usdoj.gov. Step 6. File a petition with the U.S. Bankruptcy Court. You’ll need to submit a case-filing fee, a
detailed list of your assets and debts, a copy of your most recent tax return, a statement
of your income and expenses, and other documents. You can do this on your own, but it’s not
advised. Ask a legal aid office if you qualify for
free representation. Step 7. Within 60 days of filing, you will be required
to face your creditors at a court meeting and answer questions about your financial
affairs. Step 8. If your petition for Chapter 7 bankruptcy
is accepted, a U.S. trustee (or bankruptcy administrator, if you live in North Carolina
or Alabama) will begin liquidating your assets in order to pay back your creditors. You may keep any tools that help you earn
a living. You may keep your car if you can work out
a separate repayment plan for it. Step 9. Enroll in a government-approved financial
management education program. This mandatory course, which you must pay
for, must be completed before any of your debts are erased. Step 10. Expect to have your debts discharged about
three months after your filing date. Did you know Did you know? Mark Twain, Harry Truman, and Walt Disney
all went through bankruptcy.