How to Know when to File Bankruptcy

Step-by-Step Guide

1. 1

   Step 1: Gather all your bills.

   If you're contemplating filing for bankruptcy, you may feel that your financial situation is spiraling out of control.
   
   You may have neglected opening or looking at bills you receive.
   
   However, you need to check them now so you can have an accurate understanding of what you owe.You'll need to know the status of all of your accounts, including how many days past due they are and the total amount you owe.
   
   This is particularly important if any of your accounts have gone into collection, or if you've been threatened with lawsuits or wage garnishment.
   
   You also should get the most recent statements for any secured loans (such as a car loan) you may have, as well as your home mortgage.
2. 2

   Step 2: Get copies of your credit reports.

   When deciding whether to file bankruptcy, it's important to understand exactly what's on your credit report and how filing bankruptcy will affect it.
   
   Since not all creditors report to all three credit bureaus, you need a copy of each of your credit reports from TransUnion, Experian, and Equifax.Under federal law, you're entitled to one free credit report each year.
   
   You'll have to pay a fee for the other two – typically $20 or less.
   
   To get your free credit report, go to annualcreditreport.com.
   
   This is the only website the federal government has authorized, and it has the backing of all three major credit bureaus.
   
   Try to order your credit reports as soon as possible when you start contemplating bankruptcy, so you'll have everything you need if you decide to seek credit counseling or talk to an attorney. , Once you have all your bills together, you can make a chart of all of your bills that you can use to understand exactly how much you owe and how long it would take you to pay everything off.You can use your computer to create a basic spreadsheet so you can adjust it as necessary.
   
   Create a column for the name of the creditor and account number, then columns for the total amount owed, the annual percentage rate, the minimum monthly payment, and the date that payment is due.
   
   If you have several credit accounts that are past due, you also may want to include columns for the date the last payment was made or the number of days past due the account is, and the amount it would take to bring the account current.
   
   For accounts currently in collection, list the original creditor along with the collection agency. , A basic household budget can help you better understand how much money you can put toward paying off your debt each month.
   
   Itemizing your expenses shows where your money is going each month.Take a look at your most recent pay stubs to calculate your income each month.
   
   Include any income you regularly receive from other sources.
   
   Get together any ownership documents, such as deeds or titles, and inventory your assets.
   
   Pay attention in particular to liquid assets – those that are immediately accessible as cash.
   
   Keep in mind that if you file bankruptcy, you typically will be required to liquidate many of these assets.
   
   If you have significant property and other assets, you may want to look at other options.
3. 3

   Step 3: Make a chart of your debts.

4. 4

   Step 4: Create a budget of your income and expenses.

Detailed Guide

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