Bankruptcy tip: Divide the process into manageable steps

On Behalf of | Dec 7, 2023 | Bankruptcy

Once you decide that bankruptcy is your best solution for unmanageable debt, you are part way to becoming debt-free. Now, you need to determine when to file and what to do before filing.

Bankruptcy usually works best when planned and prepared for. Breaking the process into small steps and tackling them one at a time can help you stay on track throughout your bankruptcy.

Address immediate financial risks

Stop using your credit cards and avoid new debt in the months before filing. Having a list of assets and liabilities to refer to may help, but remember to update it if something changes. Since you will face filing fees and other expenses, start setting aside some money to help you meet these costs.

Choose your bankruptcy

Decide whether you want a Chapter 7 or Chapter 13 bankruptcy. Chapter 7 wipes out most debts, but you may lose more assets. You can keep some property under Chapter 13, but you must follow a debt repayment plan. Deciding early helps you prepare according to the bankruptcy you choose.

Attend a counseling session

Before you file your bankruptcy documents, you must complete a mandatory credit counseling session from an approved agency within 180 days. The course teaches you to evaluate your situation and explore your debt relief options, including bankruptcy. Completing this step early can prevent delays.

Prepare your documentation

A few weeks before filing, collect financial documents such as tax returns, pay stubs and bank statements. Ensure that you find everything, as you will need these documents to complete bankruptcy forms and prove your financial circumstances.

Creating a calendar of events can help you know what to expect through each stage of a Texas bankruptcy. Legal guidance can help you find other ways to make the process smoother.