Realizing that you might have to file for bankruptcy can be a frightening moment in your life. But while the stigma associated with bankruptcy might be one of doom and financial ruin, the truth is much more hopeful. Bankruptcy is, at its most basic level, a tool you can use to get yourself back on solid financial footing. However, it must be handled properly, right from the beginning. Here’s an overview on what happens when you file bankruptcy.
- When you meet with your bankruptcy lawyer, be sure to gather as much financial information as you can for your first meeting. With any attorney, time equals money, so the more streamlined you can make your meetings, the better off you’ll be. Bring pay stubs, medical bills, credit card bills, loan agreements… anything that has to do with your financial situation.
- Once your lawyer actually files bankruptcy, all collection attempts are stopped. This is called an “automatic stay,” and it is against the law for any creditors or collection agencies to attempt to collect a debt while the stay is in place. This gives you time to get your financial information in order for review, but also provides a much needed relief from the constant pressure of collection attempts.
- The type of bankruptcy you file will determine what happens next. If you file for Chapter 7 bankruptcy, the next step will be to determine what percentage of your assets must be liquidated in order to satisfy the payment requirements. If you file Chapter 13 bankruptcy, your bankruptcy attorneys, along with the court and your creditors, will determine a repayment plan that fits within your means. There may be some liquidation in Chapter 13, but there is more of a chance that you can keep some of your assets, such as real estate or your car.
Knowing that what happens when you file bankruptcy is the first step towards financial recovery, and not the permanent end of your financial solvency, is vital to securing your future. Donald Trump has filed for bankruptcy four times, and is still going strong. If you have any questions, call an attorney to get the information you need to take control of your financial well-being.