Bankruptcy is always a difficult prospect, but it can be a way out of financial trouble if it is done properly and at the right time.
It is vital to consider the depth and breadth of debt, and it is often advisable to consult a lawyer to see if bankruptcy is the right choice.
What are the major types of bankruptcy?
Individuals may file for bankruptcy under Chapters 7, 11, 12 or 13 of the U.S. Bankruptcy Code. Chapter 7 -- or "liquidation" -- is preferred when a trustee selling all available assets to settle all or most debts is the best way forward. Chapter 13 is the best option when a person wishes to keep property and instead use a payback plan.
When is the best time to file for bankruptcy?
Chapter 7 bankruptcy is best filed when a person is unable to pay his or her debts or living expenses any longer. If a person still has sizable assets but considerable debt, Chapter 13 may be better. Bankruptcy is often filed after loan modifications and application for entitlement programs have failed.
How does a person file for bankruptcy?
A petition must be filed with the appropriate bankruptcy court, which also charges a filing fee unless it is waived. The petition must include information on property and assets, as well as all outstanding debts and personal information about the debtor.
Does a married couple have to file together?
It is allowed but not required for spouses to file for bankruptcy together. In separate filings, a spouse's debts and assets will be considered on his or her own.
Source: Ohio State Bar Association, "Bankruptcy," accessed Dec. 15, 2017