According to Statista, 922 Oregon residents filed for bankruptcy in 2021. Filing for personal bankruptcy is a significant decision that requires careful preparation and understanding. It is a legal process that allows you to address unmanageable debts, but it involves several important steps.
Understanding these steps is important to ensure that you are ready for the process and its implications.
Assess your financial situation
To begin with, you need to assess your financial situation thoroughly. This involves gathering all financial documents, including your income statements, bank statements, loan documents and any other records that show your financial transactions and obligations. By doing this, you will get a clear picture of your total debt, assets, income and expenses. This assessment is important as it helps you understand the scope of your financial challenges and prepares you for the next steps.
Undergo credit counseling
Once you have a comprehensive view of your finances, you need to undergo credit counseling from an approved agency. This step is mandatory and must occur within 180 days before filing for bankruptcy. During the counseling session, a certified counselor will review your financial situation, discuss possible alternatives to bankruptcy and help you create a budget plan. This process is important as it provides you with professional guidance and may offer solutions that you have not considered.
Choose the type of bankruptcy
Next, you need to decide which type of personal bankruptcy to file: Chapter 7 or Chapter 13. In Chapter 7 bankruptcy, you may have to liquidate some assets to pay off debts. In contrast, Chapter 13 allows you to keep your assets but requires you to follow a repayment plan over three to five years. Your choice will depend on your specific financial situation, including your income, debts and assets.
Complete and file paperwork
Once you decide on the type of bankruptcy, you need to complete the required paperwork. This involves filling out several forms that provide detailed information about your financial situation. These forms can be complex, so you should take your time to fill them out accurately. Make sure to disclose all your assets, liabilities, income and expenses.
Preparing to file for bankruptcy takes time and patience. Each step requires your careful attention and commitment to ensure a smooth process and the best possible outcome for your financial future.