If you are facing debt issues, you may be considering filing for bankruptcy. However, you should understand bankruptcy and the alternatives that are available to debtors. Although bankruptcy is not permanent, you need to know what happens if you go bankrupt.
Bankruptcy is a legal process that can last for 12 months, and can be an option for those who need to get rid of debts they are not able to pay. When you become bankrupt, possessions and property (non-essential assets) and disposable income can be used to pay off any creditors you owe. Once the bankruptcy period is over, your debts will become cancelled or discharged.
How Does A Person Become Bankrupt?
Before you can understand what happens if you go bankrupt, you should first understand how a person becomes bankrupt. The bankruptcy court can declare you are bankrupt once a bankruptcy order has been issued. The court issues this type of order after it a bankruptcy petition has been presented.
The petition can be presented by:
- A debtor
- A person that is bound by a voluntary agreement
How to File a Bankruptcy Petition
You should consult with an experienced bankruptcy attorney before you file for bankruptcy. The attorney will know the paperwork that you will need to file. The attorney will also make sure the paperwork is filed correctly. If the paperwork and necessary documentation is not filled out and submitted correctly, your entire case could be dismissed by the court.
There will be fees associated with the filing, and if you hire an attorney, you will also have to pay additional fees for legal representation.
It is also important to consult with a bankruptcy attorney so you can figure out if bankruptcy is the best option for your particular financial situation.
A Creditor Can Force a Debtor to File For Bankruptcy
Many debtors do not know that creditors can also file a creditor’s petition against you in bankruptcy court if you owe them a certain amount of money. Different creditors may be on the same creditor’s petition, with respect to different debts.
So, what happens if you go bankrupt? The outcome will depend on the type of bankruptcy you file and whether you choose to have legal representation or go through the process on your own.
Avoid the challenges of filing for bankruptcy alone. Schedule a free consultation with us today to learn more about bankruptcy and our other debt relief services.