You may have found yourself in over your heads with credit card debts, medical debts, or other debts. You may feel that you can no longer keep up with the minimum payments, and that your only true option is bankruptcy.
Once you decide that bankruptcy is the path for you, there are a number of steps you must take. First, you must decide which type of bankruptcy fits your situation. Most people file either a Chapter 7 or a Chapter 13. Chapter 7 allows most of your debts to be cancelled, while a Chapter 13 requires that payments be made on a payment plan. Both a Chapter 7 and a Chapter 13 have specific requirements, as well as limitations.
Before you file, you are required to complete a means test. A means test is a calculation that determines your ability to pay your creditors. It is designed to prevent people with high incomes from filing for Chapter 7 bankruptcy, which discharges debts. It compares your financial status to the average person in your area. If you pass the means test, you can file a Chapter 7, and if you do not, you can only file a Chapter 13. However, the judge can dismiss the case if he or she believes the debtor is filing in bad faith.
Next, bankruptcy law requires that you complete credit counseling before going through with the bankruptcy process. The counseling must be done with an approved credit counseling agency within 180 days before your case is filed. The agency will review the options available to you and will also assist you in reviewing your budget. There are a number of ways to do the counseling, including in person, over the phone, and online. If you do file for bankruptcy, you must have a certificate showing that you received the counseling before your case was filed.
If you do decide to file for bankruptcy, you should be very careful in choosing an agency for the counseling. Many are not legitimate and are simply scams. Even if an agency is an approved one for bankruptcy counseling, there is no guarantee that the agency is any good. You should speak with your attorney about which agency he or she recommends.
The next step you should take before filing for bankruptcy is to gather information. You should make a list of your creditors, and determine whether those debts are secured or unsecured. Secured creditors have liens or mortgages on your property, while unsecured creditors do not. This information will be important to you before and after you file for bankruptcy.
The decision to file for bankruptcy is not an easy one. If you are considering filing for bankruptcy, it’s important that you speak with a bankruptcy attorney first. The bankruptcy laws are complex and ever-changing. If you are in the Atlanta area, call the Atlanta bankruptcy attorneys at Holston & Huntley. Call us today- consultations are free and you are under no obligation to use our services. We serve Metro Atlanta Georgia as well as Birmingham Alabama including surrounding areas.