There may come a time in a person’s life when their bills vastly outnumber how much they earn, and there is no end in sight. Some people may find that they are unable to meet the minimum required payments each month, slowly impacting their credit for the worse and only adding to how much they owe in total. Depending on your financial situation, you may be someone who could benefit from filing for bankruptcy.

Of course, filing should not be taken lightly and getting as much information about it as you can will help you make the right decision for you. If you aren’t sure about whether to file for bankruptcy or not, you can consult with a local lawyer near you for the guidance you need.

Is there anything I should avoid doing prior to filing for bankruptcy?

There are several mistakes that people may commit, without realizing it, prior to filing for bankruptcy. Bankruptcy is a complex process in which traps and road bumps are common. If you are trying to manage your financial difficulties, it is never too early to speak with a reliable bankruptcy lawyer near you for additional information. A lawyer can see to it that you do not make any pivotal errors when filing, including the following mistakes:

  • Adding large amounts to your credit cards before filing for bankruptcy, including balance transfers, cash advances, and high charges. 
  • Paying off loans that you owe to relatives before filing bankruptcy.
  • Attempting to conceal assets on bankruptcy paperwork.
  • Selling an asset or transferring it to someone else because you are concerned about losing it in bankruptcy. 

Who is eligible to file for bankruptcy?

In general, anyone can file for bankruptcy, whether you are an individual or corporation. But, not every party will qualify for a certain type of bankruptcy chapter. If you are married, your spouse does not have to file with you. However, there may be instances in which it is beneficial for both of you to file. Because every situation varies from another, the best way to find out if you are eligible is to speak with a bankruptcy lawyer in your town.

What are the types of bankruptcy?

There are seven bankruptcy chapters, and each is designed differently. The most commonly used are Chapter 7 and Chapter 13. Before submitting paperwork for a specific bankruptcy chapter, it is highly recommended that you have a bankruptcy lawyer review them for accuracy. Here we have briefly described each chapter:

  • Chapter 7: Liquidation – the debtor uses assets and sells them off as a way to pay back creditors. 
  • Chapter 9: Municipalities – local governments may have financial problems that cannot be easily solved. 
  • Chapter 11: Business Reorganization – a chance for businesses to reorganize their finances to stay afloat.
  • Chapter 12: Fishermen and Family Farmers – those in these two fields who meet criteria can propose a repayment plan of their debts over 3-5 years.
  • Chapter 13: Reorganization – designed for individuals or small businesses, who will abide by a repayment play until debts are paid. 
  • Chapter 15: Foreign Creditors – useful to parties that represent assets, creditors, and debtors in more than one country. 

For answers to your questions that were not answered here, consider meeting with a reputable bankruptcy lawyer in Oklahoma City, OK, such as from Marty Martin Law.