“Filing bankruptcy” means that you will be discharging or eliminating some of your debts. Depending on your situation, you may choose to file for one kind of bankruptcy over the other form. These are Chapter 13 and Chapter 7.
You may have gotten sick or lost your job. Now, you are struggling to keep up with your current debts, but you just don’t have enough income coming in.
Look at all of your debts and assets
Before you file for bankruptcy, make a full listing of your assets and your debts. This step will help you when it is time to start working on how you will either pay back your debts over time or how some of the debts may be discharged or eliminated. Include your bank accounts and balances, your home, personal property and vehicles.
Next, pull together every document you will need, such as recent tax returns, retirement account statements, statements from your bank accounts, pay stubs, and statements for your vehicles, mortgages and credit cards.
If your creditors won’t work with you
Some of your creditors may refuse to work with you on negotiating new payments. While you may have explained what happened to put you into your current position, they may not change their minds.
Other types of loans cannot be discharged in a bankruptcy proceeding. These include court fines and penalties, student loans, alimony and child support.
Other financial obligations, such as medical bills, credit card debts, lease and contract agreements and loans may be successfully discharged.
A few things you should know before filing for bankruptcy
While you may be relieved to get some of that debt off your shoulders, other effects of bankruptcy are not as pleasant. For instance, your credit score may be negatively affected. Any loan co-signers may be required to pay for your bills in a Chapter 7 bankruptcy.