What Should Your Objectives Be In Bankruptcy?

Bankruptcy sounds like a big and scary topic. However, it is a tool that people and businesses use every day to get control of their finances. If you focus on a handful of objectives, the process should be relatively fast and reasonable. Petitioners should approach bankruptcy with these three goals.

Completeness

More than anything, you want to be sure your filing is complete before you send it. One of the best reasons to hire a bankruptcy attorney rather than going it alone is to make sure your petition is thorough. They can help you to make sure you've listed every debt and creditor in your case. Likewise, they can help you ask the court for all the asset exemptions available.

Remember, it's important to file a complete petition. Once you submit your initial case to the court, you'll only have a few weeks to submit supporting documents. You need to submit everything you need to support your case, including proof of income status based on tax documents and pay stubs.

Qualification

You can only file one of two types of bankruptcies. These are liquidation and restructuring.

Liquidation means the court sells your non-exempt assets and distributes the proceeds equitably among the creditors. People automatically qualify for liquidation under Chapter 7 if they make less than or equal to their state's median income. If you don't qualify automatically, you'll have to provide proof of your financial circumstances. Also, in either instance, petitioners must show they haven't filed and completed a Chapter 7 case in the last 8 years.

Restructuring tends to be a more complex process. You'll have to prove that you can make good on a payment plan that will last three to five years. Similarly, you must prove restructuring is necessary to get your financial situation under control. 

Financial Stability

Bankruptcy is not a financial death sentence. The long-term goal of bankruptcy is to provide citizens the chance to retire their debts. This allows them to achieve financial stability once they have manageable bills to pay.

After a successful bankruptcy, you will have the chance to rebuild your credit record. While you may not find credit available at low rates, you should be able to obtain credit, make payments, and improve your situation within a few years. Credit agencies remove Chapter 13 bankruptcies 7 years after the filing dates, and they remove Chapter 7 ones after 10 years.

Talk to a lawyer for additional help.