No one ever dreams of getting bankrupt when they are kids, but it’s something many people have to go through somewhere during their life. It’s a terrible thing but often becomes necessary when everything has gone so far that there is no coming back.
The entire bankruptcy process can be very confusing, and you might not know what to do. It might also be very challenging to ask anyone for guidance because you might feel embarrassed. To help you get ready, here are eight things that you need to understand.
Take Account of Your Expenses
To make sure that bankruptcy is the most suitable option for you right now, take account of your expenses. You need to gather your thoughts, sit down, and figure out your budget.
Start by writing down all your sources of income after the tax deductions. Then, write down how much money you spend every month. You should be entirely honest with yourself at this point. Most people write their utility bills, groceries, fuel, insurance, and other primary things, but they forget about the small stuff. The lunch snacks, bottles of beer, pizza with friends, and other things.
You mustn’t leave out a single expense if you’re looking to get ahead of this situation. Once you have the numbers in front of you, it will be easy to figure out whether it’s possible to pay off the debts with little cutbacks or not.
Know Your Credit Report
If you are convinced that bankruptcy is the only way out, then it is essential to figure out exactly who you owe to and how much the money is.
The first thing you need to do is look up your credit report. Out of the three major credit reporting agencies in the country, you have the right to get a free report from each of them once a year. That is why you need to make sure there is no physical or online mail from these companies. If there is, then check it out. If there isn’t, then you can go online and search for an annual credit report and request one. Make sure that you don’t end up paying for these, as they are supposed to be free.
While going through physical and digital mail, also look out for letters from your creditors.
Why You Shouldn’t Take Advice from People
Many people around you are close and trustworthy, but are they the best people to go asking for financial advice?
You may start to open up to a close friend or family member who has gone through a financial crisis and declared bankruptcy in the past. And sure they will give plenty of tips and solid advice that helped them through the entire process. But that is entirely related to them. There is a good chance that none of those things you both talked about for hours might make even a little difference in your case. Even the lawyer they recommended might not be able to properly carry out your process.
That’s why, it would be best to not go around asking for advice unless they are professionals.
There Is Nothing to Feel Bad About
There is probably a lot going on in your life, and it may seem like you are under mountains of debt. While that may be going on, any hospital bills, job problems, or personal issues might seem to make matters worse. But you should realize with the situation in today’s economy, you’re not the only one.
There are millions of others suffering from just as much financial difficulty, if not more. They are struggling to make ends meet and put food at their dinner table every night.
Many people continue to get deeper and deeper into debt. They keep struggling every single day, and simply won’t file for bankruptcy because they are ashamed of what it has come to. However, there is nothing to feel bad about. People have struggled financially for decades, if not centuries.
There are many celebrities, politicians, big stars, and even presidents who have had to declare bankruptcy in the past. The reasons clearly differ from people to people, but that does not mean that you should feel bad about wanting to clear things up a little.
Understand That It’s Not Easy to Do by Yourself
Many people think that all they need to do is fill out a few forms, file them with a court, and they are done. While it may be tempting to do that, you should avoid it at all costs.
Filing a bankruptcy case is a legal process, and every form that gets submitted under your name will not be taken lightly. If there is a problem with your case, then there will be inevitable consequences to your actions. Your case might be dismissed entirely, and that will definitely make all your creditors jump at the chance because their rights will be back.
If you think that seems horrible, there are a few mistakes that could end up with you being charged as a criminal and facing jail time. Not only that, but improper or incomplete disclosure might result in you not being able to file for bankruptcy at all in the future.
Although the thought of searching the internet and doing it by yourself may arise very often, you need to make sure not to act on it. The reason is that it can do much more harm than good. Having an experienced bankruptcy attorney will make the entire case much more relaxed.
Hire the Right Attorney
As you just read before, filing for bankruptcy is immensely challenging on your own, and it’s crucial to get the help of an attorney to do it right. But you need to keep in mind, not every lawyer will able to reach your goals. That is why there are many things you need to consider before hiring a lawyer.
Here are a few questions you can ask them:
- Do you specialize in bankruptcy, or are you a general lawyer?
- Can you tell me for how many years have you been practicing as a bankruptcy lawyer?
- Would you mind telling me the number of cases you have had in the past 12 months?
- Do you completely understand my situation? If so, please give me a summary?
- How can you help me achieve my goals?
- How much are you going to charge for the entire process? Will you bill me by the hour? What is included in the rates, if I’m not being charged by the hour and what isn’t?
You don’t want a general attorney who can be your go-to for any kind of situation. You should get a San Diego bankruptcy lawyer because they specialize in dealing with bankruptcy cases.
Other than that, it would be great to do some research by yourself before picking an attorney. The attorney that you eventually choose should work within your budget. They should understand your needs and keep them in mind whenever planning. They need to plan for the long term and get you out of this horrible situation. They could guide you on whether to file for Chapter 13, Chapter 7, or any others.
A reasonable attorney will keep your best interests at heart and work towards getting you better. But be sure to not go for a cheap lawyer, as they might not be able to handle your case.
Comply with the Lawyer’s Requests
Until your entire case is over, you should not rest easy. Just because a lawyer may be taking care of the situation, doesn’t mean that you are out of it yet. The creditors can get up and use their rights at any moment. They can call, sue, repossess, garnish, or foreclose, among other things, until your case is in the files in the court.
That is why you should be ready to do anything your lawyer requests. Your attorney will need various files, including tax returns, proof of income, and bank statements. Not only these, but they will also need many other things, and they will request them when required. If you delay giving them the documents by even a single day, it only delays the filing of your case.
Even if you have sent all the documents down to their office, follow up to make sure that they have been received. Also, make sure all your creditors are listed in the credit report your attorney has.
Learn From Your Mistakes
After finally being done with everything, you might be very relieved. However, many people file for bankruptcy more than once in their life. That is why you should learn from your mistakes and take better care in the future.
It would be best to continue the payments on the government-related debts that you are still under. Many of these agencies might offer the chance to have a more manageable payment plan, and you need to properly stick to it.
Be careful and properly manage your finances in the future.
