How to Declare Bankruptcy

The number of people filing for bankruptcy has gone up sharply over the years. There are many reasons for this rise in bankruptcy filing. The economic recession left many people cash strapped and made it almost impossible for them to repay the loans taken from banks and financial institutions. Bankruptcy can give you relief from your mounting debts. However, knowing exactly how to declare bankruptcy or how to claim bankruptcy is essential.

Process of Declaring Bankruptcy

There are a lot of formalities and many useful documents are required to complete the bankruptcy procedure successfully. For declaring bankruptcy under the chapter 7 personal bankruptcies, it is required that your income is higher than the median of the state in which you reside. People finding it difficult to pay their debts and should be aware that chapter 13 bankruptcy allows them to repay all their debts in a period of three to five years. This can indeed be a big relief from the mounting pressures of monthly installments for the loans availed.

You should be aware of the documents which they would be needing to declare bankruptcy. Your income tax returns for the past two years, your credit report, papers and documents of loans and all details of the secured as well as unsecured loans availed by you would be required for filing of bankruptcy. Then the next important step is to fill up the bankruptcy form with the help of an attorney. You can also fill them on your own provided you know all the details regarding bankruptcies.

Bankruptcy filings can cost you around $200 if you choose to file it as per the chapter 7 bankruptcy procedures. On the other hand, the fee for filing for chapter 13 bankruptcy is $185. Once you are done with this process successfully, your debt repayment will automatically stop and your creditors will have no right of asking you for repayment. Meetings are held with the debtors and creditors and final decision regarding the implementation and acceptance of the bankruptcy is given after that.

However, at this point, you should also be aware of the after bankruptcy effects. Though bankruptcies are known to provide relief, you will find it extremely tough to get a loan from banks again due to your poor credit score and bad credit report. Even if you are successful in convincing them that your financial position has changed over the years, you may not get loans at attractive rate of interests as enjoyed by the people with a good credit score. Declaring personal bankruptcy can also affect your social status.

The moral of the entire story is that one needs to be more disciplined and careful when accepting loans. You should have proper financial planning as of how you would be repaying them without any kind of defaults. This itself is the key to a bright financial future.