Steps involved in declaring bankruptcy

| Feb 3, 2020 | Bankruptcy |

Ohio enjoyed a strong economy in 2019. According to the state’s labor bureau, Ohio experienced a low unemployment rate and a 3% average increase in personal income. However, statistics do not help much when your personal financial picture looks bleak. During hard times, there is hope.

Many people think of bankruptcy as a last resort, and with good reason. It seems like a drastic measure, and it can remain on your financial record for up to a decade, depending on which type of bankruptcy protection you seek. Still, bankruptcy is sometimes the best course of action for those unable to pay off all debt within five years. If you are thinking of declaring bankruptcy, it may help to know the steps involved.

Collect financial records

The first step is getting a clear view of your financial picture. Start by listing income and assets, then note expenses and debts. You need an accurate accounting to know how to proceed. It may be daunting, but set fear aside and look at the numbers.

Participate in credit counseling

Before filing for bankruptcy, individuals must complete a court-approved credit counseling course. Through this course, you will explore options for debt repayment. Credit counselors look at your financial records and try to design a feasible strategy to pay off debts. They make recommendations, at which point you can decide to follow their debt repayment plan and abandon the bankruptcy option. You may choose not to follow their plan, in which case, you simply file their suggestions along with your other bankruptcy paperwork.

File a petition

If you decide to pursue bankruptcy, you must choose whether to file for Chapter 7, liquidation or Chapter 13, known as the wage-earner’s plan for debt adjustment. Filing the petition and proper paperwork can become complicated, as you need to comply with myriad complex federal and state laws. However, completing all the steps can be a huge relief. At that point, the future rests in the hands of a judge. No matter the outcome, you will know that you have done all you can to correct the situation.