3 steps to help you prepare to file for bankruptcy

On Behalf of | Jun 23, 2023 | Bankruptcy |

According to the 2021 Finmaster report, 6577 people filed for bankruptcy in North Carolina. If you find yourself sinking deeper into debt and are unable to keep up with payments, you might be considering bankruptcy as a way to manage your financial situation. Filing for bankruptcy is a major decision that will have lasting impacts on your financial life, so it is important to prepare thoroughly before you proceed.

Filing for bankruptcy offers a way to start over financially, but it does not come without its challenges. Preparation and understanding of the process are key. The following steps can guide you through the preparation process.

1. Analyze your financial situation

The first step in preparing to file for bankruptcy is to take a close look at your financial situation. Gather all your financial documents, including bills, loans, credit card statements and any other debts. You also need to understand your income level and routine expenses. This overview gives you a clear picture of your financial health and helps you decide if bankruptcy is the right solution for you.

Detailed financial analysis also helps you determine which type of bankruptcy you should file. The two most common types are Chapter 7, which involves liquidating assets to pay off debts, and Chapter 13, which sets up a repayment plan to pay back creditors over time.

2. Get credit counseling

Before you can file for bankruptcy, you must complete a credit counseling course. This requirement is part of the Bankruptcy Code and must occur in the six months prior to filing for bankruptcy. The course can help you explore all your options and ensure that bankruptcy is the right path for you.

3. Organize your paperwork

When filing for bankruptcy, you need to provide detailed information about your finances. This includes a list of all your creditors and the amount you owe, details of your income, a list of all your property and a detailed list of your monthly living expenses. Organizing all this paperwork is a time-consuming but necessary part of the process.

Bankruptcy is a significant decision, and preparing appropriately can help ease the process and set you on a path toward financial recovery.