If you’ve fallen on hard times recently, you are not alone. In 2023, 434,064 people filed for personal bankruptcy in the United States. While there is a common stigma surrounding bankruptcy, it remains a viable option for those who are unable to pay back outstanding debts and are struggling to stay afloat financially.
Bankruptcy provides the opportunity for a fresh start for many Americans. The type of bankruptcy filed impacts the protection of your assets and the way in which you receive debt relief. Here is a guide to understanding the basics of bankruptcy to help you file.
Types of Bankruptcy
There are several different types of bankruptcy. Each option provides varying ways to file, how assets are protected, and how debt is relieved. The six types of bankruptcy filings are:
- Chapter 7
- Chapter 13
- Chapter 9
- Chapter 11
- Chapter 12
- Chapter 15
If you have ever asked the question, “Which bankruptcy should I file?” it’s best to consult with your bankruptcy attorney to understand and weigh your options. The bankruptcy filing process can be difficult to navigate alone, as it involves understanding of legal requirements and making a case before a judge. Your lawyer can guide you through every step of the process, as well as help you assess whether any alternative options are available to you.
Where to File
The court in which you file for bankruptcy depends on where you live. For example, if you live in Pennsylvania, you will need to file for bankruptcy with a federal court. If you live in Berks County, the nearest federal bankruptcy court is the United States Bankruptcy Court of the Eastern District of Pennsylvania in Reading, PA.
Depending on the court you file with, you may be required to attend a virtual hearing via Zoom, as opposed to attending a hearing in person at the court. Your lawyer will help you determine where to file and ensure that you are fully prepared before filing.
How to File
When filing for bankruptcy, it’s best to consult with a bankruptcy attorney who has experience helping people like you receive a fresh start. There are several steps to take to file for bankruptcy.
Step 1: Assess Your Financial Situation
Each person’s financial situation is different. The situation that you are in will determine how you should file and what type of bankruptcy you should file for. With each different type of bankruptcy, there may be different requirements for filing. However, before filing, you will need to assess if bankruptcy is truly the best option. In some instances, there may be alternatives to help you avoid the need of filing for bankruptcy. Weighing all your options ensures that you made the best decision for your financial future.
Step 2: Determine the Type of Bankruptcy
The most common types of bankruptcy to file for are Chapter 7 and Chapter 13.
Chapter 7 bankruptcy allows you to discharge eligible debts in exchange for selling unprotected property. This allows you to pay back your creditors and relieve your unpaid debts. Protected assets, such as your home, car, or retirement accounts, will not be sold off.
Chapter 13 bankruptcy creates a debt repayment plan, in which you show the court that steps are in place to reorganize finances and cash flow to gradually pay off debt.
Each different type of bankruptcy requires different ways to file and different fees involved with filing.
File a Petition
To file for bankruptcy, your attorney will help you file a petition with the bankruptcy court. This includes the type of bankruptcy that you are filing for, information associated with that type of bankruptcy, your personal finance information needed to file, and the filing fees.
Do I Need a Bankruptcy Lawyer?
While filing a petition personally may be a feasible option for some, most people often need the help of a bankruptcy attorney. A lawyer has had years of experience helping file petitions just like yours and understands what the court needs and expects. This gives you the easiest way of navigating the bankruptcy process, so you can focus on relieving your debts and taking control of your financial future.
