Money troubles can happen to anyone, even kids. If your family is facing a lot of debt and can’t seem to pay it off, you may have heard the term “bankruptcy” thrown around. But what exactly is bankruptcy, and how does it work? In this article, we’ll give you a simple breakdown of what you need to know about filing for bankruptcy.
Here are the steps to follow when filing for bankruptcy:
- Determine which type of bankruptcy to file for
There are two common types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is known as a “liquidation bankruptcy,” which means the court will sell your non-exempt assets to pay off your creditors. Chapter 13, on the other hand, allows you to keep your property and pay off your debt over time through a payment plan.
- Gather all your financial information
You’ll need to provide detailed information about your income, expenses, debts, assets, and property. This includes your tax returns, bank statements, pay stubs, and any other financial documents.
- Complete the necessary bankruptcy forms
The forms you’ll need to complete will depend on which type of bankruptcy you’re filing for. You can find the forms on the United States Courts website or get them from a bankruptcy attorney.
- File your bankruptcy petition with the court
Once you’ve completed the forms, you’ll file your bankruptcy petition with the court. This officially starts the bankruptcy process.
- Attend a meeting of creditors
Within a few weeks of filing your bankruptcy petition, you’ll attend a meeting of creditors. During this meeting, you’ll answer questions from the bankruptcy trustee and any creditors who attend.
- Complete any additional requirements
Depending on your situation, you may have to complete additional requirements before your bankruptcy is finalized. For example, you may need to attend a financial management course.
- Receive your bankruptcy discharge
Once you’ve completed all the requirements, the court will discharge your bankruptcy. This means your debts will be forgiven, and you’ll have a fresh start.
Filing for bankruptcy can be a challenging decision, but it can also be a way to get relief from overwhelming debt. It’s essential to consult with a bankruptcy attorney before making any decisions. They can help you determine which type of bankruptcy is right for you and guide you through the process.
Remember, bankruptcy is not a decision to be taken lightly. It can have long-term consequences on your credit score and financial future. However, if you’re struggling with debt, filing for bankruptcy may be the right choice for you.
In conclusion, bankruptcy is a legal process that can help individuals or businesses get a fresh start when overwhelmed by debt. By following these steps and consulting with a bankruptcy attorney, you can navigate the process and make the best decision for your financial future.
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