It is not hard to accumulate debt.
Credit cards, car payments, mortgages and medical bills can get out of hand. Combined with a damaged economy and an increase in job loss, debt can spiral out of control.
In many cases, the only way out is to file for bankruptcy. Unfortunately, hiring a lawyer may not always be an option when you do not have the financial means to pay for legal services. Do it yourself bankruptcy is an option, but you need to understand more about bankruptcy and whether filing on your own is the best choice.
Do It Yourself Bankruptcy: Chapter 7
Chapter 7 bankruptcy is one of the most common types of bankruptcy chosen. Many individuals choose Chapter 7 because it usually allows them to wipe the slate clean and start over. (Some of the most common reasons for this type of filing include folks looking for a medical bankruptcy or a credit card bankruptcy solution.)
The laws that govern this type of bankruptcy often provides certain exemptions. This means that things like your clothing, personal and household items.
If you have a mortgage and/or car payment that you have kept current, some states count these as exemptions as well as other things. If you meet all your state’s requirements for a Chapter 7, it is often the best choice to file yourself. (If you feel like you’re not a detail-oriented person than a chapter 7 bankruptcy attorney might be the best way to go.)
Do It Yourself Bankruptcy: Chapter 11
Chapter 11 bankruptcy is designed for corporations instead of individuals, especially those that are closing–or soon to cease operations.
Filing a Chapter 11 will often require a lawyer because it is so complicated. It involves a complete liquidation of all assets. The funds are then divided to pay off the corporation’s debts.
The Chapter 11 must follow each and every law for this type of bankruptcy or the court can deny it. If you intend on continuing with a do it yourself bankruptcy under this chapter, you will need to pay attention to each detail, no matter how small you think it is.
Do It Yourself Bankruptcy: Chapter 13
Chapter 13 bankruptcy is often chosen for individual people who do not qualify for a Chapter 7. This type involves the court devising a plan for repaying the debt over a period of three to five years. The debt amount is reduced by percentage decided by the court.
Photo: Taber Andrew Bain
A do it yourself bankruptcy may not be possible here because a Chapter 13 is more complicated. If you make an attempt to file on your own, a judge may order you to seek legal counsel.
The decision to file a diy bankruptcy is not one to be taken lightly. While you may be trying to save money, you need to understand the true cost of bankruptcy by doing your homework and be absolutely sure what the process will do to your finances.
Look at the court documents that you are required to submit. Find out what documentation you will need to provide. If it becomes too much or you do not understand something, talk to a lawyer.
Click Here to Find out How to Perform a Do It Yourself Bankruptcy
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