Filing for bankruptcy can be an intimidating and depressing process, especially if you’re poorly prepared or don’t have the right people assisting you in the matter. Unfortunately, misinformation and the omission of important information are still problems in the financial advisory industry, albeit relatively rare in comparison to the number of advisers who will give you a helpful perspective. Thus, there’s still a need to double check your course of action even if one or more people have told you that bankruptcy is the best way out. With that said, if you are fairly certain that you want to consider bankruptcy as a solution to your current situation, at least take the following four steps beforehand:
1. Study and Research Thoroughly
When you’re making a decision that will affect your financial future and livelihood, don’t rely on the opinions and expertise of other people alone. Instead, take the time to read everything you can find on the topics of bankruptcy and any applicable alternatives. The last thing you want is to be enduring a court process that you’re somewhat unsure or uneducated about. If you don’t know what an equity receiver is, you probably need to do more studying.
2. Re-Assess Finances
Once you have a firmer grasp on the eligibility factors for bankruptcy, re-assess your financial situation from a fresh perspective to see if you still feel that bankruptcy would be the best route. Search online for a checklist or questionnaire that can help you decide whether to pursue a bankruptcy filing.
3. Learn About Receivership
During bankruptcy some or all of your assets may need to be transferred into the possession of a court-appointed receiver. In some cases, the equity in your property may also need to be transferred to an equity receiver. The fastest way to learn more about the specifics of receivership would be to speak with a local receiver about your situation. For example, if you’re in the L.A. area you might benefit from a conversation with someone at the area’s FedReceiver firm.
4. Consult with an Attorney
Once you’re sure you want to file for bankruptcy based on your research and re-assessment of your finances, the first step in starting the process would be to consult with an attorney that specializes in bankruptcy. They’ll able to use their expertise to help you affirm whether bankruptcy is the right decision, and if so, which type of bankruptcy would be most beneficial in your scenario.
Consider All Possible Options and Outcomes
By definition, bankruptcy is supposed to be a last resort that an individual takes when everything has gone wrong and they’re at their wit’s end about how they’re going to repay all their debts. Before committing to that route, consider the negative consequences associated with bankruptcy and look for any other options that might be applicable or worth trying. Finally, weigh the potential outcomes against the costs and risks involved, and always run your decision by a professional who may be able to provide useful insight or suggestions.