A bankruptcy is a way in which a person or business who is unable to pay their debt off can either be cleared of most debts completely – or work out arrangements to pay that debt off in smaller chunks over a longer period of time. Although bankruptcy is not necessarily a ‘quick fix' for someone who is unable to pay their bills, it can be quite helpful.
It's advisable to consider all options before filing bankruptcy – as the dent in the individual's credit report can last for 10 years, making it difficult to receive other kinds of credit in the future. However, for some people, it's the only option. Here you will find more information on how a bankruptcy petition works.
What is a Bankruptcy Petition?
The bankruptcy petition is the actual document filed with the court in order to begin the bankruptcy case. This particular petition is typically filed by the attorney of the individual filing for bankruptcy. However, in some cases it is prepared by a ‘petition preparer' and filed by the individual filing for bankruptcy. This petition will contain numerous things, including but not limited to:
This establishes what the individual owes and which creditors he or she owes. This petition will also begin the proceedings regarding the bankruptcy.
Should You File a Joint Petition or Single Petition?
If an individual is married and both spouses want to file bankruptcy, they would file a joint petition. This would mean that any debt belonging to both individuals would be included on one petition and would be affected by the bankruptcy. However, a couple who is unmarried at the time of bankruptcy filings would be required to file a single petition for bankruptcy.
It's also advised that an individual who is married and filing for bankruptcy talk with their spouse before filing. In some cases, if one spouse files for bankruptcy and the other does not – the non-filing spouse could end up being responsible for the debts and payments which were included in the filing spouse's bankruptcy petition.
It's also important to ensure that each and every creditor is included on the bankruptcy petition. If a creditor gets left out accidentally, he or she can still pursue the individual for monies owed – even after the bankruptcy. It's quite important that individuals and businesses filing for bankruptcy consult with a bankruptcy attorney before filing. This will ensure that the individuals are covered and understand the petition process correctly. Failure to do so could cause trouble down the road with creditors or with the bankruptcy process.