A bankruptcy discharge serves as the final step of bankruptcy in Canada. Once you have…
What Are the Steps to Filing for Bankruptcy? – Guest Post
Bankruptcy, it’s a scary word to many people. However, bankruptcy is not necessarily all doom and gloom. Instead, bankruptcy is meant to alleviate financial burdens and give you a fresh start. By wiping the financial slate clean, so to speak, bankruptcy can provide financial freedom and give filers a chance to learn and grow from past financial mistakes.
Steps to Take When Filing Bankruptcy
In general, a bankruptcy proceeding, no matter what type of bankruptcy, can be broken down into 6 steps. However, it is important to understand that everyone’s financial situation differs. For example, some people may have a business involved, others may have little to no assets at hand. The steps required also depend upon the type of bankruptcy (chapter 7 or chapter 11) that best fits your particular financial situation. Your finalized to-do list will most accurately be provided to you by an experienced bankruptcy attorney.
Contact an Attorney
Perhaps the most important step in filing bankruptcy is to work closely with a bankruptcy attorney. A competent attorney will be able to analyze your financial situation, see if you qualify for bankruptcy, and help guide you through the intricacies of the process.
Evaluate Your Financial Situation
When filing bankruptcy, it is always a good idea to have a clear picture of your overall financial situation. It is important to be brutally honest with both yourself and your attorney regarding your assets and debts. Remember bankruptcy is meant to give you a fresh financial start, if you hide debts from the process, you will not receive a truly blank slate.
Collect and Turn in Appropriate Paperwork
As with most adult chores, bankruptcy requires quite a bit of paperwork. Most of this paperwork your attorney will be able to handle for you. However, certain documents will need to be collected by you and signed by you. Although tedious, this part of the process is fairly painless.
Attend Your Hearing
After submitting all the required documentation and paperwork, and dependent on the type of bankruptcy you file, you will be asked to attend a hearing. At this hearing, you will be asked a series of questions to make sure that your request is truthful and accurate. In most cases, there will be several other people in the room who are also filing bankruptcy and following through with their hearing. Although this step sounds daunting it is usually a quick formality to handle.
Take a Credit Counseling Course
All persons who file bankruptcy must complete a credit counseling course to finalize their bankruptcy. In this (typically online) course you will receive helpful budgeting tips and counseling on how to properly handle finances in the future.
Finalize Your Bankruptcy
Once all the above steps are completed you can finally finalize your bankruptcy. All in all the process typically takes a couple of months to finalize through the government. However, when complete, you now have a new lease on life and financial freedom to begin again.
A Word of Caution: Things to Not Do When Filing Bankruptcy
Just as there are steps you should take when filing bankruptcy, there are a number of things that you should not do when filing bankruptcy. Here is a shortlist of things not to do right before or during your bankruptcy proceedings:
Rack up Credit Card Debt: Do not intentionally max out all of your credit cards immediately prior to filing bankruptcy, with the intention of never repaying them due to your bankruptcy. This is a red flag to both the government and creditors alike to what you’re planning, and as a result, will not work.
Lie about your assets or debt: In order for a bankruptcy proceeding to go smoothly it is important to be transparent with your bankruptcy attorney about all of your debts and assets
Do not take on any new debt: Opening a new car loan or attempting to acquire a mortgage right before or during bankruptcy is never a good idea. If you have a financial need or goal, consult with your bankruptcy attorney on the best course of action. In many instances, patience is the only option.
Transfer property to family or friends: Attempting to “save” property from being collected during bankruptcy by transferring it to family or friends right before bankruptcy could be viewed as fraudulent behavior. Once you are aware that bankruptcy is your chosen path, consult with your attorney before making any changes to your financial situation.